25 April 2006 Excise Interpretation 78001 - Partial Exemption of Excise Tax for XXXXX

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.

Dear Sir:

We are responding to your XXXXX concerning the interpretation of paragraph 260(2)(f) of the Excise Act, 2001.

All legislative references are to the Excise Act, 2001 (the Act) and the regulations therein, unless otherwise specified.

In your XXXXX you state, in part:

I have recently been assigned a file in which the RCMP seized some tobacco that was not stamped in accordance with the Act. Along with the tobacco, the RCMP seized the vehicle that was used in the transportation of goods subject to forfeiture. Furthermore, the RCMP found a list showing names of people and an amount of money that the contravener had received to buy tobacco. The search of the vehicle revealed $XXXXX in currency. As the officer reasonably believed that the money had been used in relation to an infraction under the Act, the currency was seized and listed on the form EA 263.

Paragraph 260(2)(f) of the Act provides, in part, that an officer may, for purposes of an inspection, "seize anything by means of which or in relation to which the officer reasonably believes this Act has been contravened."

In my opinion, the purpose of this section authorized the RCMP to affect a civil seizure in respect of anything by means of which or in relation to which the Act has been contravened. This would include conveyances. So that raises the question on whether or not currency falls within the meaning of "anything by means of which or in relation to which, the Act has been contravened". What about a farm/warehouse where illicit tobacco is being stored? Where does it stop? As you can see the interpretation of that particular section can be very large.

Interpretation Requested

In light of the above, would you kindly confirm if paragraph 260(2)(f) does gives the RCMP the power to seize conveyances, currency, barn and practically "anything" they believe was used in relation to a contravention of the Act.

Interpretation Given

The interpretation of section 260 should not be done by paragraphs in isolation, but of the section as a whole. For the purposes of this interpretation, section 260 can be paraphrased as:

An officer may at any reasonable time inspect processes, property or premises in order to determine compliance with the Act. In doing so the officer may:

•   Enter any place (subject to special rules in place for dwellings) the officer reasonably believes that activities subject to the Act may be carried on;

•   Stop a conveyance and inspect or examine it (for compliance with the Act);

•   Require an individual to be present, answer questions, and provide reasonable assistance during the inspection, audit or examination;

•   Open any receptacle (or container) that the officer reasonably believes may contain anything to which the Act applies;

•   Take samples of anything without charge; and

•   During an inspection, audit or examination, and at or in that place, an officer may seize anything

•   the officer reasonably believes was used as a means of contravening the Act, or

•   the officer reasonably believes was used in relation to a contravention of the Act.

To summarize, our interpretation of paragraph 260(2)(f) as it relates to civil seizures and to the facts presented:

•   Anything is subject to seizure when used as "a means of" contravening the Act or "in relation to" a contravention of the Act. "Anything" includes unstamped tobacco, conveyances, money, or any other thing.

•   Subject to flagrant exaggeration or abuse of fact or sensibilities, it is our position that "reasonably believes" should rest within the discretion of the seizing officer.

Analysis

"Anything"

The Act does not define "anything". "Anything" is defined as "a thing of any kind". Black's Law Dictionary and the Internet Lawyer International website, define "things" to include any and all things, corporal and incorporal, tangible and intangible, with the exclusion of individuals.

For purposes of the Act, we confirm our interpretation of "anything" to include, in addition to illicit tobacco and alcohol, conveyances, money, barns, warehouses, farms, leases, franchises...literally any or all things.

"Anything by means of" and "anything in relation to"

We reviewed the influence of the connecting phrases "anything by means of" and "anything in relation to" as they apply to paragraph 260(2)(f) of the Act. We conclude the legislative phrases should be applied in the widest possible context, subject to there existing a causal connection between the thing being seized and the contravention.

As summarized in the Supreme Court case for Slattery (Trustee of) v. Slattery [1993] 3 S.C.R. 430, and "relating to" with reference to Ss. 241(3) of the Income Tax Act:

The connecting phrases used by Parliament in s. 241(3) ("in respect of " and "relating to") are of the widest possible scope and suggest that a wide rather than narrow view should be taken when considering whether a proposed disclosure is in respect of proceedings relating to the administration or enforcement of the Income Tax Act.

Somewhat less information is available on the phrase "by means of", however in a criminal case heard by the Quebec Court of Appeal, it stated that, with reference to section 68 of the Criminal Code, the phrase "by means of" necessarily implies a causal connection between the death and the alleged unlawful act. (R. v. Vaillancourt (1996), 105 C.C.C. (3d) 552 (Que. C.A.))

"Reasonably believes"

In R. v. Landry, [1986] 1 S.C.R. 45, the Supreme Court addressed "reasonably believes" as it related to entry into a private dwelling.

49 The only case since Semayne's Case I have found in favour of the view that a policeman may without consent or a warrant enter into a dwelling and arrest a person there solely on the basis that he reasonably believes the person has committed an offence is Davis v. Russell (1829), 5 Bing. 355, 130 E.R. 1098.

50 ... The court's recognition of this fact, however, afforded cold comfort to the plaintiff, described in the report as a respectable inhabitant of Cheltenham. The constable was held to have had reasonable grounds for what he did and her action against him consequently failed. (emphasis added)

We conclude that where the seizing officer determines, or "reasonably believes", that there is a connection between a 'thing' and a contravention of the Act, the 'thing' is subject to seizure pursuant to the provisions of paragraph 260(2)(f).

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 Act, 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) 954-5898.

Yours truly,

Stan Loach
Excise Duty Operations - Tobacco Unit
Excise Duties and Taxes Division
Excise and GST/HST Rulings Directorate

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