5 July 2002 GST/HST Ruling 41140 - Application of the GST/HST to Coconut Milk

Thank you for your letter of XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to coconut milk. You supplied a sample of XXXXX Coconut Milk for our examination (the Product).

Statement of Facts

1. The Product is sold in a variety of different sized containers, including the XXXXX sample of the Product provided to us which is described below:

•   The Product is packaged in a XXXXX sealed metal can.

•   The ingredients of the Product are coconut extract, water, and citric acid (an antioxidant).

•   The Product label states; XXXXX

•   The Product label has a pictorial representation of a XXXXX.

2. Although not indicated on the label, you indicate that the Product can be consumed without mixing or combining it with another product.

Ruling Requested

The Product is zero-rated under the provisions of section 1 of part III of Schedule VI to the Excise Tax Act (ETA).

Ruling Given

Based on the facts set out above, we rule that a supply of the Product is zero-rated.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to our interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Explanation

Section 1 of Part III of Schedule VI to the ETA, states that food or beverages (including ingredients) are zero-rated unless the product falls within one of the exceptions in paragraphs (a) to (r). It is likely that a product that is represented (i.e., labelled and marketed) solely for use as an ingredient would not fall within the exceptions. Notwithstanding that the Product under review may be consumed as is, it is labelled and marketed as an ingredient and not a beverage.

However, where a product is represented for use as an ingredient and for another use (e.g. as a beverage), that product may fall within an exception if other requirements included in the paragraph are met. Therefore, where a coconut milk product is labelled and marketed as a beverage, it may not be zero-rated.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-9218.

Yours truly,

Kevin W. Smith
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate