Excise Duty Memoranda Series

Notice to the reader:
This is an HTML version of the printed publication. It is also available in other formats. To view an exact rendition of the printed publication, see the .pdf version.

---

8.1.2 Special Excise Warehouses

June 2003

Disclaimer

The information in this memorandum does not replace the law found in the Act and its Regulations. It is provided for your reference. As it may not completely address your situation, you may wish to refer to the Act or its Regulations, or contact any Canada Customs and Revenue Agency (CCRA) tax services office for additional information.

Table of Contents

• Provision for a special excise warehouse licence
• Obtaining a special excise warehouse licence
• Restrictions for a special excise warehouse licensee
• Sale and removal of tobacco products
• Revocation of an authorization to be a sole distributor
• Maintaining records and filing returns
• Debts and the collections process
• Offences and penalties

Provision for a special excise warehouse licence

Special excise warehouse licence
ss 20(1)

1. A special excise warehouse licence may be issued to a person (i.e., a “special excise warehouse licensee”) who is authorized by a tobacco licensee to be the only person, other than the tobacco licensee, who is entitled to distribute a tobacco product manufactured by the licensee to an accredited representative.

Meaning of “accredited representative”
s 2

2. An “accredited representative” is a representative of a foreign country who is entitled to certain tax exemptions under the Foreign Missions and International Organizations Act as specified in Article 34 of the Convention set out in Schedule I of that Act, or in Article 49 of the Convention set out in Schedule II of that Act. Such persons include, but are not limited to, foreign diplomats and consular officials.

Personal or official use
para 32(2)(h)

3. In order for an accredited representative to possess tobacco products free of excise duty under the provisions of the Act, the products must be for their personal or official use.

Meaning of “personal use”
s 2

4. “Personal use”, in relation to the use of a good by an individual, means the use of the good by the individual, or by others at the individual’s expense, but does not include the sale or other commercial use of the good.

Obtaining a special excise warehouse licence

Storage of unstamped tobacco products
para 32(2)(c)

5. A special excise warehouse licence allows a special excise warehouse licensee to store, on designated premises, domestically produced unstamped tobacco products that they are authorized to distribute in accordance with their licence.

Single licence
ss 20(2)

6. Only one special excise warehouse licence will be granted to the same person.

Licence limited
to one premises
ss 20(3)

7. A special excise warehouse licence will apply only to the person indicated in the licence application. Only one premises may be designated as a special excise warehouse of the special excise warehouse licensee.

8. Instructions and requirements for obtaining a special excise warehouse licence are provided in Excise Duty Memorandum 2.2.1, Obtaining and Renewing a Licence.

Restrictions for a special excise warehouse licensee

Restriction
s 52

9. A special excise warehouse licensee may store tobacco products manufactured in Canada in their special excise warehouse only for the purpose of sale and distribution to accredited representatives for the personal or official use of the representatives.

Sale and removal of tobacco products

Sale
para 32(3)(c)

10. A special excise warehouse licensee may sell or offer to sell an unstamped tobacco product to an accredited representative for their personal or official use, if the product is one that the licensee is permitted under the Act to distribute.

Removal
ss 50(11)

11. A special excise warehouse licensee may remove from its warehouse Canadian manufactured tobacco (i.e., cigarettes, tobacco sticks and other manufactured tobacco) and cigars for delivery to an accredited representative for their personal or official use, if the licensee is permitted under the Act to distribute the tobacco or cigars.

Authorized purpose

12. Other than to return tobacco products to the tobacco licensee who manufactured them, the removal of tobacco products for delivery to accredited representatives is the only authorized purpose for which they may be removed from a special excise warehouse.

Revocation of an authorization to be a sole distributor

Return of tobacco products
para 21(1)(a)

13. If the authorization granted by a tobacco licensee to a special excise warehouse licensee to be the sole distributor of their tobacco products to accredited representatives is rescinded or revoked, the special excise warehouse licensee must immediately return all of the tobacco licensee’s tobacco products stored in the special excise warehouse to the tobacco licensee’s excise warehouse.

Written notification
para 21(1)(b)

14. A tobacco licensee must immediately notify the CCRA in writing of the revocation of an authorization to be a sole distributor to accredited representatives of the licensee’s tobacco products.

Cancellation
ss 21(2)

15. In cases where a person is no longer authorized to be the sole distributor of a tobacco licensee’s products to accredited representatives, the CCRA will cancel the special excise warehouse licence of the person, unless that person is authorized by another tobacco licensee to distribute that licensee’s products to accredited representatives.

Maintaining records and filing returns

Keeping records
ss 206(1)

16. Every person who possesses a licence under the Act is required to maintain all records that are necessary to determine whether they are in compliance with the Act.

17. Additional information on the requirement to maintain books and records is available in Excise Duty Memorandum 9.1.1, General Requirements for Books and Records.

Filing returns
ss 160(1)

18. Every special excise warehouse licensee is required to file form B264,
Excise Duty Return – Special Excise Warehouse Licensee, in respect of each fiscal month, and to calculate and remit any excise duty payable on that return.

Fiscal month
ss 159(1)

19. Where a licensee has determined a fiscal month for GST/HST purposes, the same fiscal month applies for purposes of excise duty. Where such a fiscal month has not yet been determined, a person may choose a fiscal month using established GST/HST rules, or use a calendar month.

20. Additional information with respect to the filing of monthly returns, remitting excise duty, and paying the correct amounts of excise duty is available in Excise Duty Memorandum 10.1.1, Returns and Payments. Information relating to the amounts to be included on the excise duty return will be contained in Excise Duty Memorandum 10.1.5, Completing an Excise Duty Return - Special Excise Warehouse Licensees.

Debts and the collections process

Debts
ss 284(1)

21. Excise duty and other amounts payable under the Act are debts due to the Crown and may be recovered through the court process or in any other manner provided under the Act.

Reminder notice

22. A special excise warehouse licensee who is late filing returns may receive a notice or a telephone call from a CCRA official as a reminder of their obligation to file outstanding returns.

23. Additional information on the collections process will be available in
Excise Duty Memorandum 12.2.1, Collection Activities.

Offences and penalties

Enforcement
Part 6

24. Information on offences and penalties will be provided in Excise Duty Memoranda 8.9.1, Warehousing-Related Offences and Penalties, and 12.9.1, Administrative Offences and Penalties.

All of the memoranda in the Excise Duty Memoranda Series will be available on the CCRA Web site at http://www.cra-arc.gc.ca/tax/technical/act2001-e.html