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.
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MEMORANDUM FOR XXXXX
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September 08, 2005
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The purpose of this memorandum is to provide a response to your request concerning the application of section 158 of the Excise Act, 2001 ("Act") to XXXXX and its proposed importation of Russian-made vodka. You provided a copy of XXXXX letter to XXXXX, of our XXXXX office, in which they requested clarification of the requirements for moving the product into Canada for the purposes of re-work and re-export to the United States.
Statement of Facts
(1) XXXXX holds both a spirits licence and an excise warehouse licence under the Act. It is located in XXXXX, where it produces beverage spirits for purposes of sale in Canada and for export.
(2) XXXXX of XXXXX has asked XXXXX to re-work certain bottled vodka products.
(3) XXXXX has proposed to ship to XXXXX cases of bottled Russian vodka under the brand names XXXXX and XXXXX, in various bottle sizes. It would like to have XXXXX decant the vodka, water it down to 40% alcohol by volume (80 proof), filter it to polish the colour, and rebottle the product. The repackaged vodka would then be re-labelled and re-exported to the United States.
(4) The reworked and repackaged product would be under a new label, likely under the XXXXX name, for sale in the United States.
(5) Section 158 of the Act allows a spirits licensee to remove from non-duty paid packaged spirits from their excise warehouse to return them to the bulk spirits inventory of the spirits licensee.
Interpretation Requested
We have been asked to advise as to whether the provisions of the Act, and, in particular, section 158, allow XXXXX to remove the non-duty paid spirits in question from their excise warehouse to their manufacturing or production area in order to carry out the proposed re-working and re-bottling described above.
Interpretation Given
It is our view that section 158 of the Act allows a spirits licensee to remove the packaged spirits in question to their excise warehouse in order to return them to their bulk spirits state, under their spirits licensee. This would then allow the spirits to be reworked and repackaged.
Explanation
Webster's Ninth Collegiate Dictionary defines the verb "return" in several ways, including "to restore to a former or a normal state".
Another provision of the Act that allows for the removal of tobacco goods from an excise warehouse for rework or destruction (namely subsection 50(10)), calls for them to be removed "from the excise warehouse of the tobacco licensee who manufactured them". The wording in that provision is certainly more specific than the wording used in section 158 in relation to the removal of packaged spirits (or that of section 157 in relation to packaged wine) from the excise warehouse of a spirits (or wine) licensee.
However, in order to remove any ambiguity in the intended meaning of sections 157 and 158 of the Act, we will propose to the Department of Finance that both sections be reworded as follows:
157. A wine licensee may remove non-duty-paid packaged wine from their excise warehouse to the bulk wine inventory of the licensee.
158. A spirits licensee may remove non-duty-paid packaged spirits from their excise warehouse to the bulk spirits inventory of the licensee.
Therefore, you should advise XXXXX that their proposed set of transactions may be carried out under the provisions of our Act, provided that the repackaged vodka fully conforms in all other respects to the provisions of the Act and its regulations, including the Regulations Respecting the Information to be Displayed on Alcohol Containers and their Packaging. However, since the provisions of subsection 3(1) of the Importation of Intoxicating Liquors Act require that the importation of the packaged spirits must be made by or on behalf of the XXXXX Liquor Control Commission, the licensee must check with the Commission as to how or whether they, too, will allow these transactions to take place.
If you have any questions on this matter, please feel free to contact me at (613) 954-4208 or Steve Mosher at (613) 941-1497.
Ron Hagmann
A/Manager
Excise Duty Operations - Alcohol
Excise Duties and Taxes Division
Excise and GST/HST Rulings
2005/10/06 — RITS 63688 — Application of $3.00 Exemption to Loose Diamonds
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