Federal Appeal


Provincial authority could not provide exemption from federal duties

This was appeal of dismissal of appeals of assessments made under Excise Act, 2001 (Can.) (“EA”). Appellant was corporation that manufactured and sold tobacco products at its principal place of business located on First Nations reserve. Appellant held manufacturer’s licence for purposes of EA and must pay duty. From Sept. 2005 to July 2007, appellant did not pay duty under EA on manufactured tobacco products it sold to retailers located on reserves in Ontario. Appellant claimed that unmarked cigarettes under meaning of Tobacco Tax Act (Ont.), and which may only be sold to Indians on reserves in Ontario were not packaged for sale to general public under meaning of s. 2(b) of Stamping and Marking of Tobacco Products Regulations (Can.), and were exempt from tobacco duties under EA. Appellant appealed assessments made under EA. Appeals were dismissed. Tax court judge concluded that duty on appellant’s tobacco products became payable pursuant to s. 42(1)(a) of EA when products were packaged for sale to Indians. Appeal dismissed. Textual, contextual and purposive interpretation to applicable legislative and regulatory provisions led to conclusion that cigarettes and other tobacco products manufactured in Canada and packaged for eventual sale on Indian reserves were subject to duty on tobacco set out in EA. Purpose and intent of s. 42(1)(a) of EA, read with s. 2(b) of Regulations, was to impose duty on tobacco products, which was payable by tobacco manufacturer at time products were packaged in smallest package in which they were normally offered for sale to general public. EA did not provide for exemption from duties on tobacco products destined for sale on Indian reserves or to Indians. There was no inconsistency between expression “general public” in s. 2(b) of Regulations and marketing and sale of tobacco products to Indians on reserves. EA did not exempt manufacturers from paying duty on tobacco products when products were sold on reserve to Indians. There was no reason to find that sales of tobacco products made on reserves to Indians were not sales to general public. Indians were general public for which appellant was authorized to manufacture cigarettes. Provincial authority could not provide exemption from federal duties.

Grand River Enterprises Six Nations Ltd. v. Canada (Sep. 19, 2012, F.C.A., Mainville, Sharlow and Trudel JJ.A., File No. A-495-11) Decision at 213 A.C.W.S. (3d) 227 was affirmed. 222 A.C.W.S. (3d) 278.

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