The Supreme Court of Canada considered the valuation of imported goods under the Customs Act.
Mattel Canada imported goods manufactured in Hong Kong through a three-tiered distribution system.
The Court held that the relevant 'sale for export to Canada' under s. 48(4) was the sale between Mattel U.S. and Mattel Canada, as Mattel Canada was the importer who held title when the goods entered Canada.
The Court also held that royalties paid by Mattel Canada to a third-party licensor, and periodic licence fees passed through Mattel U.S. to master licensors, were not dutiable under s. 48(5)(a)(iv) because they were not paid as a 'condition of the sale' of the goods for export.
The appeal by Mattel Canada was allowed in part, and the cross-appeal by the Deputy Minister was dismissed.
