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
Our file: 166270
[Addressee]
Dear: [Client]
Subject: EXCISE DUTY INTERPRETATION - TOBACCO MARKING FOR CIGARS DESTINED FOR SALE IN A CANADIAN DUTY FREE SHOP
Thank you for your e-mail of [mm/dd/yyyy] to […] concerning questions related to tobacco markings for cigars destined for sale in Canadian duty free shops. You indicate that [the company][…] is considering […] the duty free market and wish to ensure that the stamping of these products is in full compliance with Canadian law.
All legislative references contained in this letter are to the Excise Act, 2001 (Act) and the Stamping and Marking of Tobacco Products Regulations (Regulations), unless otherwise noted and relate to the delivery of Canadian manufactured and imported cigars to Canadian duty free shops.
INTERPRETATION REQUESTED
You pose 3 questions to the Canada Revenue Agency (CRA) relating to the marking of cigars destined for sale in Canadian duty free shops.
1. Is the law in question, specifically Schedule 8 to the Regulations, effectively the law (i.e. required font, style, sizes) that we must adhere to in producing our duty free stamps?
2. Are there any other law/regulations of relevance to our anticipated duty free activities?
3. Is the attached stamp sample acceptable to the CRA (i.e. more precisely, the use of the word “cigar” on the stamp)?
INTERPRETATION GIVEN
It must be noted that cigars, whether domestically manufactured or imported into Canada, destined for sale in a duty free shop are not required to be stamped under the Act. However, as explained below, the cigars are required to be marked in accordance with the Act.
1. Is the law in question, specifically Schedule 8 to the Regulations, effectively the law (i.e. required font, style, sizes) that we must adhere to in producing our duty free stamps?
Subsection 6(2) of the Regulations requires that the container of Canadian manufactured cigars intended for delivery to a duty free shop display the marking set out in Schedule 8 to the Regulations.
For imported cigars, subsection 7(1) of the Regulations requires that containers of cigars intended for delivery to a duty free shop display the marking set out in Schedule 8 to the Regulations.
Subsection 7(2) or the Regulations requires that the Schedule 8 marking be printed on or affixed to the container in a conspicuous manner and in accordance with the Schedule 8 specifications.
For purposes of printing or affixing the Schedule 8 “Duty Not Paid / Canada / Droit Non Acquitté” tobacco marking, the marking is required to appear on each case containing cigars and must meet the minimum specifications as set out in the schedule.
Case is defined in section 1 of the Regulations as “a corrugated cardboard box in which packages or cartons of tobacco products are packed, primarily for the purpose of transport and protection against damage”.
For further information, please refer to Excise Duty Notice EDN30 Tobacco Marking Requirements under the Amended Stamping and Marking of Tobacco Products Regulations.
The Notice is available at: http://www.cra-arc.gc.ca/E/pub/em/edn30/README.html
2. Are there any other law/regulations of relevance to our anticipated duty free activities?
The CRA can comment only on the requirements under the Act. There may be other federal and provincial legislation applicable to your intended activities that you may need to consider.
With respect to the prescribed information and marking requirements for containers of cigars for sale in duty free shops, I also refer you to sections 3, 3.1, 3.3 and 3.4 of the Regulations.
These sections relate to the prescribed information required to be printed or affixed to containers (packages, cartons, cases) of manufactured tobacco and cigars. Prescribed information is in addition to tobacco markings.
For Canadian manufactured cigars, paragraph 28(1)(b) of the Act stipulates that the tobacco product cannot be removed from the premises of the tobacco licensee unless it is packaged and if not intended for delivery to the duty-paid market that its container be marked.
Section 37 and subsection 38(1) of the Act requires that the packaged unstamped Canadian manufactured cigars be immediately placed in the tobacco licensee’s excise warehouse and its containers display the appropriate tobacco marking and prescribed information. Paragraph 50(7)(f) of the Act then allows for the cigars to be removed from the excise warehouse for delivery to a duty free shop.
Paragraph 32(2)(b) permits an excise warehouse licensee to possess and sell imported cigars. Paragraph 51(2)(d) of the Act then permits imported cigars to be removed for delivery to a duty free shop.
For unstamped imported cigars, subsection 38(2) of the Act requires that the containers display tobacco markings and the prescribed information prior to delivery to a duty free shop.
A Canada Border Services Agency sufferance warehouse may not be utilized to mark imported tobacco products therefore the tobacco marking and prescribed information must be printed on or affixed to the containers prior to importation into Canada.
3. Is the attached stamp sample acceptable to the CRA (i.e. more precisely, the use of the word “cigar” on the stamp)? (Image reproduced below.)
A tobacco marking is not a ‘stamp’. The term ‘stamp’ has a defined meaning under the Act to indicate that, amongst other things, duty has been paid.
Schedule 8 to the Regulations prescribes the wording of the tobacco marking to be ‘Duty Not Paid / Canada / Droit Non Acquitté’. The prescribed tobacco marking does not include a product descriptor, therefore ‘Cigars / Cigares’ should not be incorporated in the wording of the tobacco marking.
Finally, with respect to the ‘duty free marking’ depicted in the image, it appears that it is attached to a box (package) that may contain cigars. The box does not appear to be a ‘Case’ as defined in the Regulations, therefore would not require a tobacco marking.
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) 954-5898.
Yours truly,
Stan Loach
Technical Policy Advisor
Excise Duty Operations - Tobacco Unit
Excise Duties and Taxes Division
Excise and GST/HST Rulings Directorate
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