The Federal Court of Appeal has rejected a controversial levy that would have raised the price of MP3 players, cellphones and computers.

The FCA, which released its decision Thursday, said the Copyright Board — a regulatory body that determines royalties for copyrighted works — did not have the authority to impose the levy on digital recorders.

The levy, which was slated to be introduced in 2008, would have amounted to an additional $5 to $75 depending on the storage capacity of the recorder.

"The Copyright Board erred in law when it concluded that it has the legal authority to certify the tariff that CPCC has proposed for 2008-2009 on digital audio recorders," the FCA said in its decision.

The Retail Council of Canada, which opposed the tax, heralded the decision as a victory for consumers and retailers.

"Retailers have fought against these levies since their creation in 1997 because it taxes a product based on what a consumer possibly could use it for," Diane Brisebois, president of the RCC, said in a release issued Thursday.

Canadian retailers also noted the levy might drive consumers south of the border in search of lower prices.

The Canadian Private Copying Collective, an association of composers, recording artists, publishers, and record labels, asked the Copyright Board of Canada in early 2007 to consider applying the fee to MP3 players in Canada.

The request followed a Federal Court of Appeal decision rendered two years earlier, rejecting the application of a levy to MP3 players.

Traditionally, levies have been applied to products such as blank tapes in order to compensate the recording industry for any duplicates made on those tapes.

But analysts noted that MP3 players act as both the medium and the playing device and such a levy would be the equivalent of taxing both the blank tape and the tape recorder.

Analysts also noted the levy assumes that people are not paying for the music they store on their devices.