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, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 155192
Business Number: […]
January 9, 2014
Dear [Client]:
Subject: EXCISE RULING
Applicability of Federal Excise Tax to Light Straight Run Distillate
Thank you for your fax of June 7, 2013 concerning the application of the Excise Tax Act to “Light Straight Run Distillate”.
All legislative references are to the Excise Tax Act and the regulations therein, unless otherwise specified.
STATEMENT OF FACTS
We understand that […][ACo] produces “Light Straight Run Distillate”. According to its Material Safety Data Sheet, it is used as […] [a solvent] and as a fuel. Synonyms for “Light Straight Run Distillate” include “Straight run middle distillate” and “Gas Oil”.
RULING REQUESTED
You would like to know if “Light Straight Run Distillate” is subject to federal excise tax.
RULING GIVEN
Based on the facts set out above, we rule that “Light Straight Run Distillate” is not subject to federal excise tax as it does not meet the definitions of either “gasoline” or “diesel fuel” under the Act.
Subsection 2(1) of the Act defines “diesel fuel” as including “any fuel oil that is suitable for use in internal combustion engines of the compression-ignition type, other than any such fuel oil that is intended for use and is actually used as heating oil…”.
In this instance, “light straight run distillate”, because of its very low boiling point, would not be considered suitable for use in a diesel compression-ignition engine. The fuel would ignite at the wrong time in the cycle and likely cause damage to the engine. Because of this unsuitability, it does not meet the definition of “diesel fuel” under the Act.
Subsection 2(1) also defines “gasoline” as meaning “gasoline type fuels for use in internal combustion engines other than aircraft engines…”.
In this instance, although “Light Straight Run Distillate” is in the correct distillation cut point range for gasoline, it would require further processing in a catalytic reformer to increase the octane number in order for it to be suitable for use in a gasoline engine. Accordingly, it does not meet the definition of “gasoline” under the Act.
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.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 957-1140.
Yours truly,
Neil Varan
Excise Taxes and Other Levies Unit
Excise Duties and Taxes Division
Excise and GST/HST Rulings Directorate
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