Excise Duty Circulars

ED 212-7 - Credit Entitlements

June 2004

Overview

Under the Excise Act (the “Act”), licensed brewers are entitled to drawbacks or refunds on beer that has been exported or disposed of under prescribed conditions. The Canada Revenue Agency (CRA) administers these drawbacks or refunds by allowing licensed brewers to take credits.

Disclaimer

The information in this ED Circular 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 CRA tax services office for additional information.

References

Excise Act, sections 173 and 174
Brewery Regulations, sections 4 and 8
Departmental Brewery Regulations, sections 5, 6 and 7

Compliance

Excise duty credits

1. Subject to the requirements of this ED Circular, a licensed brewer may take credit for the excise duty paid on beer that has been

Claiming credits

2. All claims for credits must be made on an original form N10, Refund/Credit Claim, which is a three-part form. A licensed brewer may claim these credits in the form of a deduction against excise duty owing as a “Credit” in field 9 of the B96, Excise Duty Revenue Report provided that they attach a copy of form N10 to the B96. A brewer may also submit form N10 separately.

Submitting credit applications

3. If form N10 is submitted separately, it may be delivered to any CRA tax services office or mailed to the following address:

Canada Revenue Agency
Summerside Tax Centre
Other Levies Division
275 Pope Road, Suite 101
Summerside PE C1N 6E7

4. If a separate claim is not made, then attach the top copy to form B96 mentioned above and send to the Summerside Tax Centre. The second copy should be attached and submitted with the K50B, Monthly Return – Excise Duty – Beer, and the third copy kept in the licensee's files.

Availability of forms

5. Forms N10, B96 and K50B are available at the nearest Regional Excise Duty office or on the CRA Web site at the following address: http://www.cra-arc.gc.ca/tax/technical/exciseduty-forms-e.html.

Beer returned to process stock for repackaging

6. A licensed brewer must retain sufficient documentary evidence to substantiate all credits taken. In the case of beer returned to process stock, this includes evidence that such quantities of beer have been returned from the brewer's storage area or other sources.

Beer destroyed under excise supervision

7. The quantity of duty-paid beer destroyed may be calculated on the basis of the reputed package contents, as determined for payment of excise duty, if the excise officer is satisfied that the packages were full and their contents were destroyed. An excise officer may, at any time, require that the destruction of beer take place under excise supervision.

Calculating quantities of dumped beer

8. If packaged beer is dumped into a bulk tank prior to destruction,
the quantity destroyed may be calculated on the same basis as referred in paragraph 7 if the excise officer is satisfied that the quantity in the bulk tank, plus a reasonable allowance for loss in dumping, accounts for the packaged quantities reported as dumped.

Record keeping for destroyed beer

9. A record of beer destroyed is to be maintained by the licensee, which

Samples of destroyed beer sent for analysis

10. At the discretion of the excise officer, a licensed brewer may be required to carry out a balling test of beer intended for destruction under the officer's supervision. The excise officer may also send a sample of beer destroyed, accompanied by a sample of the same type of beer taken from the brewer's normal production, for analysis to the Laboratory and Scientific Services Directorate (LSSD) at the following address:

Laboratory and Scientific Services Directorate
Industrial Commodities Division
Alcohol and Tobacco Section
79 Bentley Avenue
Ottawa ON K2E 6T7

Duplicate samples retained

11. If samples are sent to LSSD as referred to above, the excise officer will take duplicate samples and retain them until the results of the analysis have been received.

No credit of excise
duty before analysis completed

12. When the excise officer requires that a sample be submitted to the LSSD, no credit for the excise duty paid will be allowed until the results of the analysis are received.

Beer shipped for export

13. A licensed brewer may take credit for beer exported, including beer delivered to
a Customs bonded warehouse, delivered to a duty free shop licensed under the Customs Act, and delivered to an accredited representative, when they provide notice of their intent to export. At the time of audit, the credit for beer shipped for export will be allowed only for those quantities for which the licensed brewer has received acceptable documentary evidence of proper delivery. Such evidence may include

14. Additional information relating to acceptable documents for export will be available in Excise Duty Memorandum 9.3.1, Export Documentation.

Beer shipped for ships' stores

15. A licensed brewer may take credit for beer delivered for use as ships' stores
when they provide notice of their intent to deliver the beer. At the time of audit, the credit will be allowed only for those quantities for which the licensed brewer has received documentary evidence of proper delivery.

16. Additional information relating to ships' stores is available in Customs Memorandum D-4-2-1, Ships' Stores Regulations.

Remission Order

17. The credit for beer shipped pursuant to a remission order may be taken for
those quantities for which the licensed brewer has received documentary evidence in accordance with the conditions contained within the Order or other documentary evidence to ensure compliance with the provisions of the Order (e.g. Visitin Forces and Visiting Forces Personnel Alcoholic Beverages Remission Order).

Time limits

18. A licensed brewer must obtain documentary proof of export within eight months of the date of shipment. If such proof of export is not provided to the CRA, the brewer becomes liable for the excise duty. Interest and penalties may also apply on any assessments raised as a result of insufficient proof of export within the required time period.