Mark Anthony – Federal Court of Appeal finds that an exemption provision should not be interpreted to give CRA discretion as to its scope

An excise duty exemption applied to Canadian cider if it could be said that it was “produced in Canada and composed wholly of agricultural or plant product grown in Canada.” This quoted requirement, if interpreted literally, would be commercially impossible to comply with if it was to be tested at the time of packaging the beverage, because by that time there invariably would have been something added to the beverage, such as a preservative, that was not an agricultural product. In rejecting the CRA position in this regard, Webb JA stated:

The Crown’s interpretation … [is] that all ingredients that are included in the packaged product must be agricultural or plant products grown in Canada, except those that are permitted to be added by the CRA, on the basis that they are “incidental”. This would result in a delegation of authority to the CRA to decide what wine will qualify for the exemption. … [I]t would not have been the intent of Parliament to implicitly delegate this authority to the CRA.

Webb JA went on to find that the quoted wording was to be applied only to each alcoholic component of the blended product, e.g., the alcoholic product of the cider fermentation process, or any spirits that were added to fortify the cider.

Neal Armstrong. Summary of Canada v. The Mark Anthony Group Inc., 2019 FCA 183 under Excise Act, 2001, s. 135(2)(a).