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
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 20th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 159716
February 20, 2014
Dear [Client]:
Subject: Excise Ruling
[…][Whether a cider product is subject to excise duty]
Thank you for your December 31, 2013 letter to our […] regional office that was forwarded to us for reply. In your letter you stated that […]([…][the Company]), operating as […][XYZ], planned to re-formulate […] cider to qualify for duty exempt status. One specific recipe and various suppliers’ letters certifying that certain raw materials were products of Canada accompanied that letter. The cider will be produced by a third party, […]([…][the Producer]).
STATEMENT OF FACTS
Our understanding of the facts is as follows:
1. [The Producer] will produce the cider, which meets the definition of “wine” as set out in section 2 of the Excise Act, 2001 (Act), in their […][Province X] facilities.
2. [The Company] will be the owner of the cider at all times.
3. [The Company] does not hold a wine licence under the Act.
4. [The Producer] does hold a wine licence under the Act and therefore is responsible for the bulk cider. Excise duty, if any, is payable by the person responsible for bulk wine immediately before it is packaged (per paragraph 113(c) of the Act).
5. Effective July 1, 2006 wine that is composed wholly of Canadian-grown agricultural or plant products is exempted from excise duty by paragraph 135(2)(a) of the Act. [The Company] has reviewed the source of their ingredients and modified the formulation of the cider and believes the cider will meet the exempting criteria.
6. No ingredients other than those listed in your letter will be used in the production of the cider.
7. The apple juice concentrate to be used in the cider is made from 100% Canadian grown apples and was processed into apple juice concentrate in Canada. A country of origin statement from the producer was included with your email.
8. Sucrose syrup to be added prior to fermentation is produced from Canadian grown sugar beets. A country of origin statement from the producer was included.
9. High fructose corn syrup to be added after fermentation is made from corn grown in […][Country X].
RULING REQUESTED
You have requested a ruling on whether the cider product would qualify for the exemption set out in paragraph 135(2)(a) of the Act.
RULING GIVEN
Based on the facts set out above and our review of the related legislation and publications, and our review of your submitted process we have determined that the cider produced qualifies for the duty exemption provided by paragraph 135(2)(a).
EXPLANATION
The cider, or any wine, qualifies for the exemption provided that the following ingredients are Canadian-grown:
1. The primary raw material that is fermented, for example, apples, grapes, berries, honey;
2. Any juice that is fermented – the raw materials to make the juice must have been grown in Canada;
3. Any juices, juice concentrates, fruits or plant products added in the process must be made from raw materials grown in Canada; and
4. Any spirits, wine or beer added, including brandy or fruit spirits to fortify the wine, must have been made from raw materials grown in Canada
Additives, such as sugar and yeast, are considered incidental ingredients in wine and the addition of these ingredients, regardless of source, will not exclude an otherwise qualifying wine from the duty exemption.
Based on our understanding of the ingredients and processes you have presented we have determined that the cider meets the criteria of the exemption provided by paragraph 135(2)(a) since the apple juice concentrate is made from 100% Canadian grown apples.
We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal under the provisions of the Act, that there are no relevant changes in the future to the Act or to our interpretative policy, that you have fully described all the necessary facts and the products for which you requested this ruling, and there is no change to the recipe for the cider product.
If you have any questions or require any clarification on the above matter, please call me at (613) 941-1497 or Tim Krawchuk, Manager, Excise Duty Operations – Alcohol at (613) 954-5894.
Yours truly,
Richard Crompton
Senior Rulings Officer
Excise Duties and Taxes Division
Excise and GST/HST Rulings Directorate
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