3 July 2007 Excise Interpretation 85409 - Request for Reconsideration of Instrument Certification Requirements as Outlined in EDM 1.1.5

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 excise duty requirements for instruments used to measure alcohol as outlined in the Excise Duty Memorandum 1.1.5 Instrument Certification (EDM 1.1.5). My reply has been delayed given the fact that both you and our XXXXX Regional Excise Duty Office have been working to address your concerns.

Subsection 148(1) of the Excise Act, 2001 (Act) states that the volume and absolute ethyl alcohol content of alcohol must be determined in a manner specified by the Minister of National Revenue using approved instruments. The list of approved instruments, the specifications and the examination and approval process for each of the instruments are provided in the EDM 1.1.5. I understand that a copy of the memorandum was provided to you and the XXXXX in XXXXX.

I recognize that XXXXX has taken steps to ensure that the instruments acquired to measure alcohol are approved by the Minister and that you had several contacts with Canada Revenue Agency (CRA) officials from our XXXXX Regional Office XXXXX in order to get the Mass Flow Meters (MFMs) certified as required.

I understand that XXXXX instruments were tested XXXXX, using the volume meter calibration method, and the results were subsequently forwarded to the Laboratory and Scientific Services Directorate (LSSD) for review and approval. After review, LSSD determined that the test XXXXX did not meet the requirement that the MFM measure the mass in grams or kilograms of ethyl alcohol of a strength of 95% by volume or more as stated in the Weights and Measures Regulations.

Since the volume of ethyl alcohol will vary according to temperature, additional errors are introduced, thereby making the results potentially inaccurate and imprecise. For this reason, the CRA requires that the volume of alcohol be determined using mass since it is independent of temperature.

Based on the above, XXXXX MFMs must be subjected to a second round of tests using the gravimetric method (measurement of mass). In order to accommodate XXXXX with minimal disruption, CRA officials attempted to schedule testing at a periodic maintenance shutdown, tentatively scheduled for XXXXX. However, as this did not occur, we are waiting for XXXXX to provide us with new tentative dates.

As the determination of excise duty liability is directly related to the measurement of alcohol and that quantities generated by your plant are considerable, it is essential that XXXXX remain compliant with subsection 148(1) of the Act. I can assure you that we are making every effort to facilitate this requirement and look forward to getting new tentative dates from XXXXX for a retesting of the MFMs.

Should you have further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-0111, or Tim Krawchuk at (613) 954-5894.

Yours truly,

Phil McLester
Director, Excise Duties and Taxes Division
Excise and GST/HST Rulings Directorate
Legislative Policy and Regulatory Affairs
Revenue Canada Agency

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