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 and GST/HST Rulings Directorate
Place de Ville, Tower A, 20th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 172399
Dear [Client]:
Subject: EXCISE INTERPRETATION
Definition of Cigar
Thank you for your letter of [mm/dd/yyyy], concerning the interpretation of the Excise Act, 2001 as it relates to the definition of cigar.
All legislative references are to the Excise Act, 2001 (Act) and the regulations therein, unless otherwise specified.
INTERPRETATION REQUESTED
You would like to know whether the definition of “cigar”, as set out in section 2 of the Act, requires the tobacco product to have a binder in addition to a wrapper.
INTERPRETATION GIVEN
Section 2 of Act defines cigar to include:
(a) a cigarillo or cheroot; and
(b) any roll or tubular construction intended for smoking that consists of a filler composed of pieces of natural or reconstituted leaf tobacco, a binder of natural or reconstituted leaf tobacco in which the filler is wrapped and a wrapper of natural or reconstituted leaf tobacco.
Paragraph (a) of the definition of cigar in section 2 of the Act is not dependant on paragraph (b), and vice versa. That means that a tobacco product that is a cigarillo or a cheroot will be included in the definition of cigar by virtue of paragraph (a) of the definition whether or not it meets the criteria in paragraph (b) of the definition. Similarly, a tobacco product that meets the criteria in paragraph (b) of the definition will be included in the definition of cigar whether or not it meets the criteria in paragraph (a). Therefore, paragraphs (a) and (b) are separate components of the definition of cigar that should be considered independently.
As noted in your letter, the terms “cigarillo” and “cheroot” are not defined in the Act and their composition is not specified. Therefore, when interpreting the meaning of cigarillo and cheroot, we consider the common and ordinary meaning of the terms.
Industry definitions for cigarillo and cheroot vary; however, it is generally accepted that a product that is a cigarillo or a cheroot will contain both a filler composed of pieces of natural or reconstituted leaf tobacco and a wrapper of natural or reconstituted leaf tobacco but may or may not contain a binder. Therefore, a tobacco product that is a cigarillo or cheroot does not require a binder in addition to the wrapper, in order to meet the definition of cigar in Section 2 of the Act.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the interpretation given in this letter on the proposed amendment to the Excise Act, 2001, including any additional information, is not a ruling and does not bind the Canada Revenue Agency (CRA) with respect to a particular situation. Future changes to these proposed amendments, if enacted, or to the CRA’s interpretative policy could affect the interpretation or the additional information provided herein.
If you require clarification with respect to the issue discussed in this letter, please call me directly at 613-941-2348. If you require guidance with respect to a particular product, please submit a request for a ruling including all relevant product information.
Yours truly,
David May
Excise Duty Operations - Tobacco Unit
Excise Duties and Taxes Division Division
Excise and GST/HST Rulings Directorate
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