20 July 2007 Excise Interpretation 93137 - Export Price for Independent Remanufacturer's Secondary Products

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 XXXXX:

Thank you for your letter XXXXX concerning the recently announced proposed amendments to the Excise Tax Act and how it applies specifically to end-user refunds of diesel fuel in certain circumstances.

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

We understand that XXXXX. recently designed and implemented a new fuel reporting system. Under that system, XXXXX will issue a refund to its independent fuel dealers when taxable clear diesel fuel has been sold by these dealers as heating fuel or fuel used in the generation of electricity. XXXXX would then make an adjustment to reduce the federal fuel tax liability accordingly.

Interpretation Requested

You would like to know if CRA would give consideration to allow you to continue to administer the federal excise tax as it applies to heating fuel and fuel used to produce electricity in light of the amendments announced in the federal budget of March 19, 2007.

In that budget, the Minister of Finance, the Honourable Jim Flaherty, tabled a Notice of Ways and Means Motion to amend the Excise Tax Act Relating to Excise Taxes. Under the proposed changes, the Act will be amended to provide for a statutory end-user refund program for diesel fuel used under certain tax-exempt conditions. A proposed new section 68.01 will be added to the Act allowing for a refund, under certain circumstances, of the excise tax on diesel fuel for end users and unlicensed fuel vendors.

Under the Act, heating oil is exempt from excise tax. As well, an exemption of excise tax exists for diesel fuel used in the generation of electricity, except where the electricity so generated is used primarily in the operation of a vehicle.

In circumstances where excise tax-paid diesel fuel has been sold by an unlicensed vendor or used by an end-user as heating oil, a refund of excise tax will be available as follows:

•   an unlicensed vendor of diesel fuel will be able to apply for a refund of excise tax for diesel fuel sold as heating oil, if the purchaser certifies that the diesel fuel is for use exclusively as heating oil and the vendor reasonably believes that the purchaser will use it exclusively as heating oil; or

•   an end-user who uses the diesel fuel as heating oil will be able to file for a refund of excise tax, provided that the unlicensed vendor of the diesel fuel cannot apply for a refund in respect of the fuel.

A refund of excise tax will be available to an end-user who has purchased excise tax-paid diesel fuel and uses the diesel fuel to generate electricity, except if the electricity so generated is used primarily in the operation of a vehicle. An end-user may continue to purchase diesel fuel for use in the generation of electricity (otherwise than primarily in the operation of a vehicle) on an excise tax-exempt basis from a licensed manufacturer or wholesaler if the end-user so certifies.

Interpretation Given

Statutory legislation struck by the Department of Finance regarding the Excise Tax Act is administered by the CRA. We may or may not be consulted during the drafting stages of proposed legislation. Once the legislation becomes law, we administer same in a consistent and impartial manner. Unfortunately, no exceptions may be made. Therefore, we cannot give any consideration to your request to allow you to administer end-user refunds in any manner other than that prescribed in law.

This decision was conveyed to you verbally XXXXX by Mr. Duncan Jones, Manager, Excise Taxes and Other Levies who agreed to follow up with a written response.

I am including a copy of Excise Taxes and Special Levies Notices ET/SL 65 entitled "Notice to all Tax Practitioners, Licensed Manufacturers and Wholesalers, Fuel Distributors and Filers of End-User Refunds under the Excise Tax Act".

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 ExciseTax 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) 952-5323.

Yours truly,

David F. Turnbull
Excise Taxes Unit
Excise Duties & Taxes Division
Excise and GST/HST Rulings Directorate

2007/06/07 — RITS 85746 — Tax Status of Denatured Ethanol