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XXXXX
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October 4, 2002
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XXXXX
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Dear XXXXX:
This letter is in response to a recent telephone conversation between XXXXX and Mr. Phil McLester, Director, Excise Duties and Taxes Division, concerning the production and export of prescribed tobacco brands.
In our previous letters to you of XXXXX and XXXXX we advised that the XXXXX cigarette brands and the numerous brand extensions listed therein would be recommended for approval as prescribed tobacco brands. Once these could be approved under amendments to the appropriate regulations, they would then become eligible for exemption from the normal excise tax and tobacco marking provisions applicable to exported tobacco products. We also advised that the regulatory process for the prescription of these brands would take a number of months to complete.
In our XXXXX letter, we indicated that the earliest time that the regulatory changes could take effect would be July 1, 2003, upon the coming into force of the new Excise Act, 2001. At that time, the newly prescribed tobacco brands were expected to be included in the schedules to the proposed Regulations Exempting Certain Tobacco Products from Special Duty and the Regulations Respecting the Stamping and Marking of Tobacco Products.
CCRA officials have reviewed this matter in light of the anticipated delay in obtaining regulatory approval for new tobacco brands as a result of the impending implementation of the new Excise Act, 2001. Our reconsideration takes account of the understandings set out in our previous letters of XXXXX and XXXXX that these brands have not previously been produced in Canada and will not be sold in this country. Consequently, as a transitional measure pending the implementation of the new Act, we are prepared to allow the cigarette brands and brand extensions appearing on the attached lists to be treated as eligible for exemption from the normal excise tax and marking requirements.
Therefore, pending the approval of the above-noted regulations under the Excise Act, 2001, the listed brands and brand extensions will be regarded, on an administrative basis, as qualifying under section 23.3 of the current Excise Tax Act for exemption from the excise tax otherwise imposed under section 23.13 of that Act. They will also be treated, administratively, as qualifying under subsection 202(4) of the Excise Act for exemption from the marking requirements otherwise imposed under subsection 202(2) of the Act.
If you anticipate a need to have additional cigarette brands recommended for inclusion in the lists of prescribed tobacco brands, please advise this office as soon as possible so that the necessary changes can be made to the proposed new regulations in time for the implementation of the Excise Act, 2001. For your information, the CCRA will not grant any further administrative "pre-approvals" of prescribed tobacco brands and prescribed cigarette formulas after March 31, 2003. Therefore, further requests must be submitted prior to that date in order to take advantage of the transitional 'pre-approval' process.
Should any of the brands listed above be offered for sale in the Canadian duty-paid market at any time in the future, except as provided for in subsection 23.3(1) of the Excise Tax Act and subsection 202(4) of the current Excise Act, or under subsections 38(3) and 58(1) of the Excise Act, 2001, once that Act is implemented, the exemptions from the tobacco marking requirements and the payment of excise tax or special duty would no longer apply.
Should you require any further information, please contact me at (613) 954-4208 or Steve Mosher at (613) 941-1497.
Sincerely,
Preston Gallant, CGA
Manager
Excise Duty Operations
Excise Duties and Taxes Div.
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