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
Case Number: 163982
[Addressee]
Dear [Client]:
Subject: EXCISE INTERPRETATION
Threshed Tobacco
We are responding to your letter dated [mm/dd/yyyy] […], concerning the application of the Excise Act, 2001 on threshed tobacco. Please accept our apology for the delay in responding.
All legislative references contained in this letter are to the Excise Act, 2001 (Act) and the regulations therein, unless otherwise noted.
[…]. Threshed tobacco is produced by threshing raw leaf tobacco. Specifically, this process includes the removal of the lamina from the stem or rib of the tobacco leaf.
INTERPRETATION REQUESTED
You would like to know if threshed tobacco falls within the definition of raw leaf tobacco or manufactured tobacco as defined in the Act.
INTERPRETATION GIVEN
Based on the information provided and our understanding of the threshing processes; threshed tobacco is manufactured tobacco would also be within the definition of partially manufactured tobacco (PMT) as defined by the Act.
Analysis
The following terms are defined in section 2 of the Act:
* “manufacture”, in respect of a tobacco product, includes any step in the preparation or working up of raw leaf tobacco into the tobacco product. It includes packing, stemming, reconstituting, converting or packaging the raw leaf tobacco or tobacco product.
* "raw leaf tobacco" means unmanufactured tobacco or the leaves and stems of the tobacco plant.
* “manufactured tobacco” means every article, other than a cigar or packaged raw leaf tobacco, that is manufactured in whole or in part from raw leaf tobacco by any process.
* "partially manufactured tobacco" means manufactured tobacco that is cut filler or cut rag or that is manufactured less fully than cut filler or cut rag.
Under the definition of “manufacture”, any processing step that works the tobacco leaf towards a tobacco product is considered manufacturing.
As the purpose of threshing is to separate the stems from the leaves the resulting product no longer meets the definition of “raw leaf tobacco”, but is considered “manufactured tobacco” for purposes of the Act.
[…]
The foregoing comments represent our general views with respect to the subject matter of your request. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Goods and Services Tax Rulings, do not bind the Canada Revenue Agency with respect to a particular situation. Future changes to the Excise Act, 2001, its regulations, or our interpretative policy could affect this interpretation.
If you require clarification with respect to any of the issues detailed in this letter please do not hesitate to contact me at (613) 948-3676.
Yours truly,
For Faye Chen
Rulings Officer
Excise Duty Operations - Tobacco Unit
Excise Duties and Taxes Division
Excise and GST/HST Rulings Directorate
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