Vol. 137, No. 14 — July 2, 2003

Registration
SOR/2003-241 18 June, 2003

CUSTOMS TARIFF

Regulations Amending the Customs Bonded Warehouses Regulations

P.C. 2003-988 18 June, 2003

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance and the Minister of National Revenue, pursuant to sections 99 (see footnote a)  and 100 of the Customs Tariff (see footnote b) , hereby makes the annexed Regulations Amending the Customs Bonded Warehouses Regulations.

REGULATIONS AMENDING THE CUSTOMS BONDED WAREHOUSES REGULATIONS

AMENDMENTS

1. (1) The definitions "Department" and "excise bonding warehouse" in section 2 of the Customs Bonded Warehouses Regulations (see footnote 1)  are repealed.

(2) Section 2 of the Regulations is amended by adding the following in alphabetical order:

"beer" means beer or malt liquor as defined in section 4 of the Excise Act; (bière)

"bulk" has the same meaning as in section 2 of the Excise Act, 2001; (en vrac)

"cigar" has the same meaning as in section 2 of the Excise Act, 2001; (cigare)

"manufactured tobacco" has the same meaning as in section 2 of the Excise Act, 2001; (tabac fabriqué)

"packaged" has the same meaning as in section 2 of the Excise Act, 2001; (emballé)

"stamped" has the same meaning as in section 2 of the Excise Act, 2001; (estampillé)

2. Paragraph 3(4)(e) of the Regulations is replaced by the following:

(e) the Agency is able to provide customs services with respect to the proposed bonded warehouse.

3. Paragraph 8(2)(c) of the Regulations is replaced by the following:

(c) the agency is no longer able to provide customs services with respect to the bonded warehouse;

4. Sections 14 to 16 of the Regulations are replaced with the following:

14. No licensee shall receive the following domestic products into a bonded warehouse:

(a) cigars;

(b) packaged raw leaf tobacco;

(c) manufactured tobacco that is not stamped;

(d) non-duty paid packaged or bulk spirits;

(e) non-duty paid packaged or bulk wine; and

(f) non-duty paid specially denatured alcohol.

15. No licensee shall receive into or remove from a bonded warehouse, imported tobacco products, or imported packaged spirits or wine, unless they are to be removed from the warehouse for sale to a foreign diplomat in Canada, export from Canada, sale to a duty free shop or use as ships' stores and, in the case of spirits or wine, supply to an air carrier that is licensed under section 69 or 73 of the Canada Transportation Act to operate an international service within the meaning of subsection 55(1) of that Act.

16. No licensee shall receive the following imported products into a bonded warehouse, unless they are to be removed from the warehouse for export from Canada:

(a) bulk spirits;

(b) bulk wine; and

(c) specially denatured alcohol.

5. Section 18 of the Regulations is replaced by the following:

18. For the purposes of subsections 37(2) and 39.1(2) of the Customs Act, tobacco products and packaged spirits are a prescribed class of goods and are forfeit if they have not been removed from the bonded warehouse within five years of the day on which the goods are described in the form prescribed under subsection 19(2) of that Act.

6. Section 19 of the English version of the Regulations is replaced by the following:

19. For the purposes of subsection 37(2) of the Customs Act, the prescribed time in respect of goods referred to in column I of the schedule is the time set out in column II, which time begins on the day on which the goods are described in the form prescribed under subsection 19(2) of that Act.

7. The portion of item 2 of the schedule to the Regulations in column I is replaced by the following:

Item	Column I Warehouse Goods
2.	Beer and wine

COMING INTO FORCE

8. These Regulations come into force on July 1, 2003.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Description

The current Excise Act has remained largely unchanged since 1883, with periodic amendments to address specific issues. The purpose of the Excise Act Review was to replace the old and outdated administrative and enforcement structure governing alcohol and tobacco products with a modern regime reflecting current practices.

As a result, Bill C-47 was introduced in the House of Commons in December 2001, and on June 13, 2002, the Excise Act, 2001, An Act respecting the taxation of spirits, wine and tobacco and the treatment of ships' stores, received Royal Assent. The coming into force date of the new Act is July 1, 2003.

In accordance with the Customs Tariff, the Governor in Council is authorized, on the recommendation of the Minister of Finance and the Minister of National Revenue, to make regulations respecting bonded warehouses. This authority extends to the goods that may be received in or removed from a bonded warehouse, and includes alcohol and tobacco products.

These Regulations amend the Customs Bonded Warehouses Regulations made under the Customs Tariff and are consequential to the new Excise Act, 2001. The existing regulations restrict the receipt of tobacco products into a customs bonded warehouse and the removal of those goods from that warehouse. The Excise Act, 2001 introduces further restrictions on the types of goods that may be received in or removed from a customs bonded warehouse. Therefore, the existing regulations are being amended to reflect these new limitations.

The current regulations also provide that intoxicating liquors, including spirits, beer and wine, that have not been removed from a bonded warehouse within the imposed time limit of five years must be deposited in a place of safekeeping designated by the Minister of National Revenue. Because packaged spirits generally have higher rates of duty than other types of packaged alcohol, it was considered preferable to amend the regulations to ensure that only beer and wine may be deposited in a place of safekeeping after having been in a customs bonded warehouse for five years, while packaged spirits are forfeit after that time limit and not placed in safekeeping.

In addition, minor amendments are required to the regulations to replace obsolete wording and to improve clarity.

Alternatives

There are no other practical alternatives to this amendment. These amendments are consequential to the enactment of the new Excise Act, 2001.

Benefits and Costs

These amendments are integral and consequential to the new Excise Act, 2001 regime and are necessary in order to bring the customs bonded warehouse regime in line with the changes brought about by the passage of that Act. There will not be any additional costs to bonded warehouse licensees as a result of these amendments.

Consultation

The Canada Customs and Revenue Agency (CCRA) carried out extensive consultations with stakeholders affected by the new Excise Act, 2001. Personal presentations and meetings were also held with industry groups expressing interest, and their comments and suggestions were actively sought and taken into consideration.

Compliance and Enforcement

The CCRA has resources in place dedicated to the implementation of the Excise Act, 2001. As the CCRA is responsible for the administration and enforcement of the Customs Tariff, existing resources will be used to enforce the Regulations Amending the Customs Bonded Warehouses Regulations.

Contact

Ms. Tia M. McEwan
Acting Manager
Legislative and Regulatory Development and Liaison Unit
Trade Incentives Programs Division
Trade Policy and Interpretation Directorate
Customs Branch
Canada Customs and Revenue Agency
150 Isabella Street, 4th Floor
Ottawa, Ontario
K1A 0L5
Telephone: (613) 954-7109
FAX: (613) 952-3971
E-mail: TiaMaria.McEwan@ccra-adrc.gc.ca

Footnote a 

S.C. 2002, c. 22, s. 424(1)

Footnote b 

S.C. 1997, c. 36

Footnote 1 

SOR/96-46

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