3 January 2003 Excise Interpretation 42701 - Tariff Classification: " " Brought in Under Classification 2403.91.10 Not Subject to Customs Duty Equivalent to Excise Duty

Dear XXXXX

This letter is in response to your email XXXXX concerning the importation of a product known as XXXXX and your request for a ruling on the tariff classification of this product. You also asked for information as to whether this product should be stamped "duty paid" at the time of importation.

A copy of your e-mail, as well as a sample of the product, were sent to the Customs Branch (Tariff Division) of the Canada Customs and Revenue Agency (CCRA) for their review. That Division must confirm any ruling or interpretation on tariff classification issues, and the applicability of additional duty under section 21 of the Customs Tariff. Mr. Sawab Nekiar, of the Customs Branch's Tariff Division, confirmed that XXXXX are classified under tariff item 2403.91.10 as "homogenized" or "reconstituted" tobacco "... suitable for use as wrapper tobacco."

Under subsection 21(4) of the Customs Tariff, an additional duty equivalent to excise duty is applied to most importations of manufactured tobacco products. However, tariff item 2403.91.10 is not listed under that provision. Therefore, since XXXXX classified under that tariff item do not attract the additional duty imposed under subsection 21(4), "Canada Duty Paid" stamps should not be applied under the current legislation.

However, since the XXXXX are manufactured tobacco as that term is defined in section 2 of the Excise Tax Act and under section 6 of the Excise Act, they are considered to be subject to excise tax at the current rate of $35.648 per kilogram. This tax is payable by the importer, owner or other person liable to pay duties under Customs Act at the time of importation, pursuant to the provisions of subsection 23(2) of the Excise Tax Act.

On July 1, 2003, the Excise Act, 2001 ("new Act") is expected to be implemented, and the excise tax under the current Excise Tax Act and additional duty under subsection 21(4) of the Customs Tariff will cease to apply. Under the new Act, importations of XXXXX will be subject to excise duty under the provisions of section 42. The rate is expected to be $53.981 per kilogram. Therefore, after June 30, 2003, before imported "XXXXX" can be released for consumption in the Canadian market, we will require "Canada Duty Paid" stamps to be placed on packages and shipping cases, in accordance with the provisions of the Regulations Respecting the Stamping and Marking of Tobacco Products.

Your email states that you imported XXXXX under the correct tariff classification. As indicated in your telephone conversation with Mr. Crompton, if you paid customs equivalent duty on the importation, you may wish to contact Customs about filing a request for a refund.

Should you require any further information, please contact me at (613) 954-4208 or Richard Crompton at (613) 957-4156.

Sincerely,

Preston Gallant, CGA
Manager
Excise Duty Operations
Excise Duties and Taxes Division.

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