May 28, 1951

LIB

Hugues Lapointe (Minister of Veterans Affairs)

Liberal

Hon. Hugues Lapointe (Minister of Veterans Affairs):

Topic:   VETERANS AFFAIRS
Subtopic:   QUESTION AS TO CLOSING OF HOSPITAL AT SASKATOON
Permalink

NORTH ATLANTIC TREATY

INQUIRY AS TO PLANS FOR SHIPPING POOL


On the orders of the day:


PC

Howard Charles Green

Progressive Conservative

Mr. Howard C. Green (Vancouver-Quadra):

Announcements in the press of Saturday indicate that Canada and the other nations of the North Atlantic treaty organization have completed plans for a shipping pool in

Customs Act

the event of war. Could the Minister of Transport give us some statement with regard to these plans?

Topic:   NORTH ATLANTIC TREATY
Subtopic:   INQUIRY AS TO PLANS FOR SHIPPING POOL
Permalink
LIB

Lionel Chevrier (Minister of Transport)

Liberal

Hon. Lionel Chevrier (Minister of Transport):

While the hon. member was kind enough to send me notice of his question, I have not yet had an opportunity of examining the press release to which he has referred. Since the matter is one of some importance concerning security, I think I had better look at the press report and then decide whether or not I should make a statement. If the hon. member will allow the matter to stand on that basis, perhaps I can do that within the next two or three days.

Topic:   NORTH ATLANTIC TREATY
Subtopic:   INQUIRY AS TO PLANS FOR SHIPPING POOL
Permalink

CUSTOMS ACT

AMENDMENTS TO CLARIFY ACT AND TO FACILITATE ADMINISTRATION AND ENFORCEMENT


The house resumed, from Wednesday, May 23, consideration in committee of Bill No. 198, to amend the Customs Act-Mr. McCann-Mr. Dion in the chair. On section 4-Overpaid duties not returnable after six months. Hon. J. J. McCann (Minister of National Revenue): I propose to have one of my colleagues move an amendment which will provide for a new section 125 of the act.


LIB

Alphonse Fournier (Minister of Public Works; Leader of the Government in the House of Commons; Liberal Party House Leader)

Liberal

Mr. Fournier (Hull):

I move that section 4 of the bill be amended by deleting section 125 as set out therein and substituting therefor the following:

125. (1) Where it is established by a decision of the deputy minister, an order or finding of the tariff board or a judgment of a court of competent jurisdiction that money, taken to account as duty, was paid under an erroneous construction of the law, no refund shall be made unless a written application therefor is made within six months of the date of payment, and in every other case of overpayment of duty or payment of duty in error, no refund shall be made unless an application therefor is made within two years of the date of payment.

(2) A written request for the review of a tariff classification, an appeal to the tariff board or the institution of legal proceedings for the recovery of an overpayment of duty or a payment of duty in error shall be deemed to be a written application for the purposes of subsection one.

(3) Nothing in subsection one or two shall affect or prejudice any refund pursuant to an application pending at the coming into force of this section.

Topic:   CUSTOMS ACT
Subtopic:   AMENDMENTS TO CLARIFY ACT AND TO FACILITATE ADMINISTRATION AND ENFORCEMENT
Permalink
LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

We are moving the amendment in connection with subsection 1, because often there are claims made against the crown for a remission of taxes going back as far as three years. We believe that that right should not be extended when there is a change by reason of a finding of the tariff board, a decision of the minister, or a judgment of a court of competent jurisdiction. We believe that permission should be fMr. Green.)

given to go back over entries for a period of six months, and if money is coming to people who have paid customs duty by reason of a change, then a remission or refund should be made there.

In other cases where there have been overpayment of duty as the result of an arithmetical error or something of that kind, the applicant shall have the privilege or right to go back for a period of two years in claiming that refund. We can readily understand that, by reason of judgments of the tariff board, there have been cases in which very considerable sums of money have been paid at a rate of duty which was higher because of the classification that the department made than the duty under the classsification made by the tariff board, and that there was money coming to certain people who had been importers. But then there arises the question who gets the benefit of the remission. The importer has likely charged up the original duty in his costs and added his profit to that. The goods have been sold to customers throughout the country, and when he gets a remission, especially if it goes back beyond a period of six months, he is getting a fortuitous gain to which we submit he is not entitled.

As an illustration I should like to mention something that happened fairly recently; it is an example of what occurs under the law as it now stands, and it will help to explain the point I have in mind. An importer took issue with a departmental ruling, and he went to considerable effort and some expense to appeal that decision to the tariff board. The departmental ruling was reversed by the board and the importer then became entitled to a refund. The company filing the claim covered three years' importations, involving a refund of slightly more than $100,000. Immediately following the announcement of the board's decision, twelve other importers, who were in no way parties to the appeal and who had not contested the department's ruling, filed claims also covering three years and varying from less than $100 to as much as $59,000. The total involved was $160,000. One importer claimed a refund of $59,290, a second $34,631.44, and two others $10,955 and $10,825 respectively. It is more than likely that these refunds remained in the hands of the claimants and were not passed on to the actual purchasers who had assumed the tax in their purchase price. Such a wide distribution would in any case be difficult for the importer to effect unless his records had been set up for such an eventuality. Furthermore there would be no obligation on him to do so, as the purchaser would have no legal right to claim any refund or any portion of

the refund made to the importer, unless of course some such clause existed in the terms of sale, which would he most unusual.

As this is a typical example, it will be seen therefore that what actually happens is that a number of importers suddenly and sometimes most unexpectedly find themselves, owing to the separate action of another, with a right to reclaim taxes paid over a period of three years and to obtain a refund, which would be in effect a fortuitous additional profit. We do not collect duties short paid by reason of an error, unless we notify the importer within a month of the time that the error was made. We feel that we should not have to go back beyond six months for remissions to importers in the case of a change in the law, or beyond two years in the event of any error on our part.

Topic:   CUSTOMS ACT
Subtopic:   AMENDMENTS TO CLARIFY ACT AND TO FACILITATE ADMINISTRATION AND ENFORCEMENT
Permalink
PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell (Greenwood):

Undoubtedly the amendment has eased the very stiff provision of section 4 of the amending bill as it stood, which I think was oppressive. In the first place, two years are now allowed in cases where payments are made by mistake. That of course was obviously necessary, because unless a man is following up his accounts month by month he might not discover the error in time. If by chance he is making his check at the end of the year he might find that the six months period had already elapsed. Subsection 2 of the amendment is also an aid, because it makes clear that a request for tariff classification and so on shall be deemed to be a written application for the purposes of subsection 1. I admit frankly that is an alleviation of the harshness of the original section; nevertheless I submit very earnestly to the minister that the reasons he has given for making this most substantial change from the three years in the original section are inadequate, and I suggest that it is creating an unnecessary hardship. The minister may say that six months is long enough. You might say that six months is long enough for an individual; nevertheless ordinary debts remain collectible within a period of six years. In our ordinary relations the usual limitation is six years. The government cut it down to three years, and now they propose in certain cases to cut it down to six months.

I suggest that the minister has given very inadequate reasons. In the first place I repudiate the idea that this section is being passed in order to prevent sharp practice, or something almost worse than sharp practice, on the part of certain businessmen. That seemed to be the argument. I think one thing we can trust our government to do is to be hard enough on individual citizens. There was a case brought up the other day

Customs Act

by the hon. member for Eglinton where it seemed to me the government department had been unnecessarily hard. Be that as it may, I still submit that to cut in two, namely to three years, the time which ordinary people are allowed in their transactions with each other is going quite far enough. I submit that the cases which the minister has given, if I understood them correctly, do not suggest any loss on the part of the government. Indeed the minister referred rather slightingly to a man exercising a right which had been in existence for more than six months. If it is a right, what is wrong about exercising a right? Nevertheless it almost seemed as if the minister were asking us to take the view that of course no reasonable man would think that anyone should exercise a right after the six months period had elapsed.

I understand that the present period was itself a reduction from a longer period. I do not know how long ago that was. But I am told that the original period used to be even longer than three years, that it was six or seven years. If I am wrong the minister will correct me. At any rate, that is as it may be; I am basing my argument on the three years. I am suggesting to the minister that nothing he has said shows that the public interest is suffering; therefore there is no need for this change, and I still hope that the minister may be prepared to withdraw the section.

Topic:   CUSTOMS ACT
Subtopic:   AMENDMENTS TO CLARIFY ACT AND TO FACILITATE ADMINISTRATION AND ENFORCEMENT
Permalink
CCF

Major James William Coldwell

Co-operative Commonwealth Federation (C.C.F.)

Mr. Coldwell:

Mr. Chairman, when I read the amendment first proposed I thought it was pretty harsh. The amendment introduced this afternoon certainly makes it much better than what was contained in the bill as originally introduced. Still I am inclined to agree with the hon. member for Greenwood to this extent, that the reduction from three years to six months in the one case is very substantial, and it seems to me that "erroneous construction of the law" would mean that it was really an error on the part of the department itself. I believe a period longer than six months should be allowed within which the importer should be permitted to make an application. I am wondering if the minister would increase that period to one year, leaving the two years in the other case. I believe that would be much more satisfactory; for it seems to me six months is pretty harsh. I imagine that in some businesses a mistake of this kind might not be discovered until, perhaps, there was some inquiry into the affairs of the company by accountants.

Topic:   CUSTOMS ACT
Subtopic:   AMENDMENTS TO CLARIFY ACT AND TO FACILITATE ADMINISTRATION AND ENFORCEMENT
Permalink
LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

All the judgments and

changes are published.

Topic:   CUSTOMS ACT
Subtopic:   AMENDMENTS TO CLARIFY ACT AND TO FACILITATE ADMINISTRATION AND ENFORCEMENT
Permalink
CCF

Major James William Coldwell

Co-operative Commonwealth Federation (C.C.F.)

Mr. Coldwell:

It refers to a decision of the deputy minister, an order or finding of

Customs Act

the tariff board, or the judgment of a court. So far as a judgment of the court is concerned, I suppose that might be considered conclusive, and even a judgment of the tariff board; but the decision of the deputy minister, in the first instance, means a decision of the officials administering the act, and it seems to me that is a little too much like a judge and jury coming to a decision without giving the other party an adequate chance to make an appeal. So far as a judgment of a court or of the tariff board is concerned, of -course that would be carefully gone into and both sides heard. I am referring to the decision of the deputy minister, and in that particular instance it seems to me the period should be longer.

Topic:   CUSTOMS ACT
Subtopic:   AMENDMENTS TO CLARIFY ACT AND TO FACILITATE ADMINISTRATION AND ENFORCEMENT
Permalink
LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

I hardly think the hon. member for Greenwood is being fair when he says I referred rather slightingly to some of the cases that have -come under this section; however, we will let that pass. There cannot be any injustice done to anyone, because in the great majority of cases the limitation will result in no hardship on the importer, and where any hardship does occur the governor in council may provide just relief by a refund under section 33 of the Consolidated Revenue and Audit Act.

As to the decision by the deputy minister, any such decision would be made known to importers throughout the country. The judgment of a court is published; the tariff board is equivalent to a court and -all its judgments are published. So it is not a question of taking advantage of anyone or inflicting a hardship on anyone, but I believe the revenues of the -crown should be protected to the extent that no one should make a fortuitous gain by going back two or three years. In the case I -cited, the customer got no relief, but somebody made a good deal of money.

I do not know that I can -accept the suggestion. of the hon. member for Greenwood that the period be extended to one year. This matter has been given -careful consideration by the cabinet, and the amendment that was decided upon is the amendment now proposed.

Topic:   CUSTOMS ACT
Subtopic:   AMENDMENTS TO CLARIFY ACT AND TO FACILITATE ADMINISTRATION AND ENFORCEMENT
Permalink
PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell (Greenwood):

One point has occurred to me that I should like to raise; it is a matter of draftsmanship. Subsection 2 says:

A written request for the review of a tariff classification, an appeal to the tariff board or the institution of legal proceedings . . . shall be deemed- to be a written application . . .

That seems to make it perfectly clear that at the worst the importer is bound- to know what is going on, because he will have made an appeal himself. I am troubled -about

subsection 1, however, where it says-, "Where it is established by a decision of the deputy minister". Is it not possible that in- that case there might be a decision to which the importer might not -be a party in- the sense that he was notified of it? And is it not conceivable that in su-ch a -case he would not get effective actual notice of it, and that the six months might slip away before he learned of it?

Topic:   CUSTOMS ACT
Subtopic:   AMENDMENTS TO CLARIFY ACT AND TO FACILITATE ADMINISTRATION AND ENFORCEMENT
Permalink
LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

Usually these matters are not confined to one person. On representations being made by -an importer that he is going to make an appeal, our office usually notifies all other importers in a similar line of business.

Topic:   CUSTOMS ACT
Subtopic:   AMENDMENTS TO CLARIFY ACT AND TO FACILITATE ADMINISTRATION AND ENFORCEMENT
Permalink
PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell (Greenwood):

That would be an appeal to whom?

Topic:   CUSTOMS ACT
Subtopic:   AMENDMENTS TO CLARIFY ACT AND TO FACILITATE ADMINISTRATION AND ENFORCEMENT
Permalink
LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

An appeal to the minister, or it may be brought before the tariff board. In -this instance if he is making an appeal for remission of customs duties it is probably on the basis that the law has been changed by -the tariff board to the extent that the goods he imported were wrongly classified and should be under another item on which the customs tariff is lower, so that having paid the higher rate he would be entitled to a refund. We say if he makes application for refund within a period of six months he comes within the law and is entitled to a remission.

Topic:   CUSTOMS ACT
Subtopic:   AMENDMENTS TO CLARIFY ACT AND TO FACILITATE ADMINISTRATION AND ENFORCEMENT
Permalink

May 28, 1951