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]
Case Number: 162644
Dear [Client]:
Subject: EXCISE INTERPRETATION
Excise Tax on Imported Fuel
Thank you for your [correspondence] of [mm/dd/yyyy] concerning the application of the Excise Tax Act to fuel purchased from […][B].
All legislative references are to the Excise Tax Act (ETA) and the regulations therein, unless otherwise specified.
Based on the information provided, we understand the following:
• […][A] is a manufacturer licensed under the ETA.
• [B] is a U.S. based company who imported fuel into Canada on a tax-paid basis. [B] is a distributor that is not licensed under the ETA.
• [B] was the importer of record.
• [A] purchased fuel from [B] on a tax-paid basis.
INTERPRETATION REQUESTED
You would like to know the application of excise tax to the fuel purchased from [B] and the refund mechanism.
INTERPRETATION GIVEN
Based on the information provided, [B] correctly imported and paid excise tax on the fuel at the time of the importation because they are not a licensee under the Act.
Subsection 23(1) of the ETA imposes a tax on goods listed in Schedule I, in this case bio-diesel, when the goods are imported or manufactured or produced in Canada and delivered to a purchaser.
Subsection 23(2) states that “where goods are imported, the excise tax imposed by subsection (1) shall be paid in accordance with the provisions of the Customs Act by the importer, owner or other person liable to pay duties under that Act […]”.
Paragraph 23(7)(a) states that the tax imposed under subsection 23(1) is not payable in the case of goods that are purchased or imported by a licensed manufacturer, that are to be incorporated into and form a constituent or component part of an article or product that is subject to excise tax.
For example, a licensed manufacturer could import or purchase goods from another licensed manufacturer or wholesaler on a tax-exempt basis, provided the goods are to be incorporated into and form a constituent or component part of an article or product that is subject to excise.
When the fuel is imported and the excise tax is paid under the Customs Act, any possible refund has to be done under the Customs Act. Refunds under the Customs Act must be submitted on Form B2 Adjustment Request and processed by the Canadian Border Services Agency (CBSA). For customs related enquiries, please contact the CBSA at 1-800-461-9999.
There is no provision under the ETA that allows for a refund of excise tax to a non-licensed distributor when the goods are sold to a licensed manufacturer. Given that [B] is a non-licensed distributor, no provision under the ETA allows them to claim a refund on fuel sold to a licensed manufacturer. Consequently, [A] has acquired the bio-diesel from [B], a non-licensee, on a tax-paid basis and must therefore carry this inventory as tax-paid fuel.
For future reference, where [A] is identified as the importer of record, paragraph 23(7)(a) allows [A], under its manufacturer’s licence, to import fuel tax-exempt, under the appropriate excise tax exemption code (code 88), where the fuel imported is to be incorporated into and form a constituent or component part of an article or product that is subject to excise tax.
The foregoing comments represent our general views with respect to the subject matter of your request. This interpretation, including any additional information, is not a ruling and, in accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, do not bind the Canada Revenue Agency with respect to a particular situation. Future changes to the Excise Tax Act, regulations, or our interpretative policy could affect this interpretation.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-957-4138.
Yours truly,
Nathalie Robitaille
Excise Taxes and Other Levies
Excise Duties and Taxes Division
Excise and GST/HST Rulings Directorate
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