Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
Excise Duties and Taxes Division
Place de Ville, Tower A, 20th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
August 25, 2015
Case Number: 162537
Dear [Client]:
Subject: EXCISE RULING
Application of the Excise Tax on fuel blending by third party
Thank you for your letter of [mm/dd/yyyy] concerning the application of the Excise Tax Act to the blending of diesel and ethanol by a third party.
All legislative references are to the Excise Tax Act and the regulations therein, unless otherwise specified.
STATEMENT OF FACTS
We understand the following:
* […][The Company] ([…][ACo]) acquires fuel and ethanol from refiners across Canada.
* [ACo] contracts the refiner to blend the fuel and ethanol into ethanol blended gasoline and blended biodiesel.
* [ACo] is charged a blending fee by the refiner.
* The blended fuel is then delivered to retail petroleum facilities.
RULING REQUESTED
You would like to know if the blending of the fuel and ethanol into an ethanol blended gasoline and blended biodiesel constitute a stage of manufacturing and which entity is the manufacturer.
RULING GIVEN
Based on the facts set out above, we rule that the blending of fuel and ethanol into ethanol blended gasoline and blended biodiesel constitute a stage of manufacturing for purposes of the ETA. We also rule that the refiner is the manufacturer for the purposes of the ETA.
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Goods and Services Tax Rulings. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal, that no future change to the Excise Tax Act, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.
EXPLANATION
Paragraphs 2(1)(f) of the ETA states that a “manufacturer or producer includes … (f) any person who, by himself or through another person acting for him, prepares goods for sale by assembling, blending, mixing, cutting to size, diluting, bottling, packaging or repackaging the goods or by applying coatings or finishes to the goods, other than a person who so prepares goods in a retail store for sale in that store exclusively and directly to consumers”.
The act of blending fuel and ethanol into ethanol blended gasoline and blended biodiesel is considered to be “marginal manufacturing” for purposes of the paragraph 2(1)(f).
Since the refiner is the owner of the unblended products at the time of blending, the refiner is the manufacturer for purposes of the ETA and is liable to pay the excise tax on their sale of goods subject to excise tax at the time of delivery, unless the goods are sold under excise tax-exempt conditions.
If you require clarification with respect to any of the issues discussed in this letter, please call Nathalie Robitaille directly at (613) 957-4138.
Yours truly,
Dennis Dekleva
Manager, Excise Taxes and Other Levies
Excise Duties and Taxes Division
Excise and GST/HST Rulings Directorate
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