Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 20th floor
320 Queen Street
Ottawa ON K1A 0L5
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
Case Number : 104236
November 18, 2009
Dear XXXXX:
Subject:
_Excise Interpretation
EXCISE ACT, 2001 INTERPRETATION
Thank you for your XXXXX of XXXXX, concerning the application of the Excise Act, 2001 to the manufacture of tobacco products1 outside of Canada for importation into Canada. We apologize for the delay in our response.
All legislative references are to the Excise Act, 2001 and the regulations therein, unless otherwise specified.
We understand that a company situated outside of Canada will manufacture, package2 and stamp3 tobacco products outside of Canada. The products will be stamped in accordance with the Stamping and Marking of Tobacco Products Regulations. The products will then be imported into Canada by XXXXX and distributed in the duty-paid market4. XXXXX will pay the duty applicable under paragraph 42(1)(b) at the time of importation.
Interpretation Requested
You would like to know whether the company is required to obtain a tobacco licence under the Excise Act, 2001 and whether it is permitted to stamp tobacco products outside of Canada.
Interpretation Given
Licensing of tobacco manufacturers situated outside of Canada
The Excise Act, 2001 (Act) governs federal taxation of tobacco and regulates activities involving the manufacture, importation, possession and sale of tobacco in Canada.
Generally, section 25 of the Act prohibits the manufacture of tobacco products by a person except in accordance with a tobacco licence issued to the person under paragraph 14(1)(d). Section 27 prohibits the stamping of tobacco products by a person other than a tobacco licensee or the importer or owner of imported tobacco products that have been placed in a sufferance warehouse for the purpose of being stamped.
These prohibitions apply only to persons manufacturing and stamping tobacco products in Canada. Consequently, a person that manufacturers, packages, and stamps tobacco products outside of Canada does not require a licence under paragraph 14(1)(d) and is not subject to the prohibition under section 27.
Importation of tobacco products
Imported tobacco products intended for the duty-paid market are subject to the Stamping and Marking of Tobacco Products Regulations (Regulations). In particular, subject to certain exceptions, the tobacco products must be properly packaged and stamped. Stamps and other prescribed information must be applied in accordance with the specifications set out in the Regulations. A copy of the Regulations is enclosed for your reference.
Duty is payable on imported tobacco products by the importer in accordance with paragraph 42(1)(b). Imported tobacco products that are not properly packaged and stamped must be placed in a sufferance warehouse for the purpose of being stamped before being released into the duty paid market.
For additional information about the importation of tobacco products, please refer to Customs Memorandum D18-3-1, Reporting and Accounting of Excise Duties on Imported Tobacco, Tobacco Products, Wine and Spirits, and Release of those goods.
New tobacco stamp
In 2010, Canada will be implementing a new excise duty stamping regime for tobacco products which will affect manufacturers' stamping procedures. The Department of Finance provided detailed information about the new stamping regime in a news release on August 6, 2009. You can access the news release at the following website: http://www.fin.gc.ca/n08/09-075-eng.asp.
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 discussed in this letter, please call me directly at 613-954-5775.
Yours truly,
Faye Chen
Excise Duty Operations - Tobacco Unit
Excise Duties and Taxes Division
Excise and GST/HST Rulings Directorate
Enc.:
GST/HST Memorandum 1.4, Goods and Services Tax RulingsExcise Act, 2001: Stamping and Marking of Tobacco Products Regulations
1 In this letter, the term "tobacco products" refers to manufactured tobacco such as cigarettes.
2 A tobacco product is "packaged" when it is packaged in the smallest package in which it is normally offered for sale to the general public.
3 A tobacco product is "stamped" when certain information prescribed by regulation has been affixed to it in a prescribed format and manner and indicates that duty has been paid on the product.
4 "Duty-paid market" means the market for goods in respect of which duty, other than special duty, is payable.
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UNCLASSIFIED
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