Vol. 137, No. 19 — May 10, 2003

Stamping and Marking of Tobacco Products Regulations

Statutory Authority

Excise Act, 2001

Sponsoring Agency

Canada Customs and Revenue Agency

REGULATORY IMPACT ANALYSIS STATEMENT

Description

The new Excise Act, 2001 (the Act) received Royal Assent on June 13, 2002, thereby replacing the legislative provisions and definitions contained in the existing Excise Act regarding the production and distribution of alcohol and tobacco products. New regulations have been written to support the new Act.

The purposes of the Stamping and Marking of Tobacco Products Regulations (the Regulations) are to:

(1) set out the stamping requirements and exemptions from stamping that apply to duty-paid tobacco products;

(2) set out the marking requirements and prescribe certain tobacco brands and cigarettes for possible exemption from such requirements;

(3) define the term "packaged" as that term is used in the Excise Act, 2001 and these Regulations;

(4) set out the prescribed limits of the quantities of unstamped tobacco products, by category, that an individual may import under the provisions of paragraph 32(2)(j) of the Act, and

(5) set out the prescribed information that is required to appear on all packages of tobacco products made in Canada, and commercial-sized importations of tobacco products.

These Regulations combine and continue the stamping, marking, and labelling requirements that were previously maintained under the Tobacco Ministerial Regulations and the Tobacco Regulations, made in accordance with the provisions of the Excise Act.

In situations where provincial and territorial governments do not maintain stamping or marking requirements of their own in respect of particular types of tobacco products, the colour requirement of the federal stamping requirements will apply. The peach-coloured stamps (pantone 713), used on packages and cartons of cigarettes and tobacco sticks destined for markets where only federal stamping requirements prevail, have been in place since October 1, 2001. At that time, they replaced the uncoloured stamps and tear-tapes that were previously used on packages of cigarettes and tobacco sticks. Other federal stamping requirements affecting cigars and other manufactured tobacco products were not changed at that time, and are not altered by the present Regulations.

Since all provinces maintain their own colour and other requirements for cartons and packages of cigarettes and tobacco sticks, such requirements will prevail in respect of such products sold in their markets, except for those provinces which have chosen not to apply them to cigarettes and tobacco sticks sold at stores on Indian reserves. Also, all provinces except for Ontario maintain their own colour marking and other requirements in respect of cigarette tobacco. However, the territories of Northwest Territories, Yukon, and Nunavut do not have any marking or stamping requirements under their respective legislation, thus fully deferring to the federal stamping requirements.

The use of duty-paid stamping also extends to cigarettes, tobacco sticks, and other manufactured tobacco products destined for sale in Canadian and foreign duty-free shops.

Marked tobacco products are ones destined for non-duty paid markets. These include Canadian or imported tobacco products destined for use by accredited representatives or foreign diplomats in Canada, as well as imported tobacco products, including cigars, intended for sale in duty-free shops and for use as ships' stores. Cigars made in Canada are also exempt from excise duty when destined for sale in Canadian or foreign duty-free shops or for use as ships' stores, and are therefore subject to the marking requirements for such situations.

Certain tobacco products, namely prescribed tobacco products and prescribed cigarettes, may qualify for exemption from the marking requirements when they are made in Canada for export to foreign duty-paid markets or if they are imported tobacco products intended entirely or almost entirely for sale in Canadian duty-free shops or to be placed in customs bonded warehouses for subsequent sale in those shops or use as ships' stores. In order to qualify for the marking exemption under subsection 38(3) of the Act, such tobacco products must be prescribed and must not be commonly sold in Canada.

Canadian tobacco products, apart from cigars, that are exported to foreign "duty-paid" markets are subject to a refundable special duty. For this reason, they are required to be marked "Not for Sale in Canada" before being placed in an excise warehouse for subsequent export. For duty-paid manufactured tobacco that is intended for sale in foreign duty-free shops or for use as foreign ships' stores, the words "Not for Sale in Canada" are prescribed information that must appear on the packages of such tobacco products. Such information must also appear on Canadian manufactured tobacco that is exported to foreign duty-paid markets in excess of the 1.5 percent quantity limits on regular export production.

Prescribed information requirements under section 2 of the Regulations apply to most importations of tobacco products, but not small quantities imported by individuals for own use.

Individuals may, for example, import up to five cartons or 1 000 cigarettes for personal use without the prescribed information having to appear on the packages. Similarly, such importations are not required to be stamped, though they must be duty-paid if a Canadian resident imports them.

Alternatives

There is no alternative to the making of these Regulations. They must be put in place in order to implement the Act's requirements for stamping, marking, and prescribed information. Also, the Regulations are needed to set the prescribed quantity limits for personal possession of imported tobacco products that are not stamped or do not bear prescribed information. Without these Regulations, the stamping and marking provisions of the legislation could not be enforced.

Benefits and Costs

The stamping, marking, and prescribed information requirements give proper guidance to law enforcement officials in determining the legitimacy of a tobacco product's presence in various circumstances. This will also enable a traveller who is a returning resident to pass more quickly through Customs when he or she is clearly in possession of stamped Canadian manufactured tobacco products purchased at a duty-free shop or while on an airliner or ship. For tobacco importers and Canadian tobacco manufacturers, these Regulations will provide clear guidance as to the stamping, marking, and other information required to appear on packages and containers of tobacco products.

Since these requirements are a continuation of the tobacco marking and stamping regime administered prior to the implementation of the new Act, there should be almost no new costs associated with the measures in these Regulations, either for Canadian industry or the Canada Customs and Revenue Agency (CCRA).

Consultation

The CCRA carried out extensive consultations with the tobacco manufacturers and the Royal Canadian Mounted Police (RCMP), as well as other interested parties when the Regulations were released for general distribution in December 2001.

Compliance and Enforcement

The CCRA is responsible for enforcing, at the manufacturer and importer level, the stamping and marking provisions of the Act and these Regulations. The RCMP will carry out direct enforcement of these provisions on a day-to-day basis.

Under section 233 of the Act, tobacco licensees who contravene the stamping and prescribed information requirements as first required under sections 34 and 37 of the Act can face an administrative monetary penalty of 200 percent of the duty imposed on the tobacco product. Section 234 provides for an administrative monetary penalty of up to $25,000 for contravention of the marking requirements in section 238 of the Act.

Section 27 of the Act makes provisions against the unlawful packaging or stamping of any raw leaf tobacco or tobacco product, while section 214 sets out the possible fines and jail terms for persons convicted of such offences.

Contact

Mr. Steve Mosher, Senior Legislative Officer, Excise Duties and Taxes Division, Excise and GST/HST Rulings Directorate, Policy and Legislation Branch, 20th Floor, Place de Ville, 320 Queen Street, Ottawa, Ontario K1A 0L5, (613) 941-1497 (Telephone), (613) 954-2226 (Facsimile).

PROPOSED REGULATORY TEXT

Notice is hereby given that the Governor in Council, pursuant to paragraphs 304(1)(f) and (o) of the Excise Act, 2001 (see footnote a) , proposes to make the annexed Stamping and Marking of Tobacco Products Regulations.

Interested persons may make representations with respect to the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Mr. Mark Hartigan, Policy and Legislation Branch, Canada Customs and Revenue Agency, 20^th Floor, Tower A, Place de Ville, 320 Queen Street, Ottawa, Ontario K1A 0L5.

Persons making representations should identify any of those representations, the disclosure of which should be refused under the Access to Information Act, in particular under sections 19 and 20 of that Act, and should indicate the reasons why and the period during which the representations should not be disclosed. They should also identify any representations for which there is consent to disclosure for the purposes of that Act.

Ottawa, May 1, 2003

EILEEN BOYD

Assistant Clerk of the Privy Council

STAMPING AND MARKING OF TOBACCO PRODUCTS REGULATIONS

INTERPRETATION

1. The definitions in this section apply in these Regulations.

"Act" means the Excise Act, 2001. (Loi)

"carton" means a paperboard box or wrapper containing 15 or fewer packages of cigarettes or 200 or fewer tobacco sticks. (cartouche)

"case" means a corrugated cardboard box in which packages or cartons of tobacco products are packed, primarily for the purpose of transport and protection against damage. (caisse)

"manufacturer" means a manufacturer of tobacco products. (fabricant)

"smokeless tobacco" means chewing tobacco and snuff. (tabac sans fumée)

PRESCRIBED PACKAGE

2. For the purpose of paragraph (a) of the definition "packaged" in section 2 of the Act,

(a) raw leaf tobacco is packaged in a prescribed package when it is formed into a hand for sale or when a hand of raw leaf tobacco or broken portions of the leaf are packed for sale; and

(b) a tobacco product is packaged in a prescribed package when it is packaged in the smallest package — including any outer wrapping that is customarily displayed to the consumer — in which it is normally offered for sale to the general public.

INFORMATION ON PACKAGES

3. (1) Subject to subsection (2), the following information shall be provided in legible type on every package that contains tobacco products:

(a) the name and address of the manufacturer who packaged the tobacco products; or

(b) the manufacturer's licence number.

(2) If a manufacturer packages tobacco products for another person, the name and address of the principal place of business of that other person may be provided on the package instead of the information referred to in subsection (1).

(3) The following information shall be provided on every case of tobacco products:

(a) if the case is packed with cartons, the number of cartons in the case and the number of packages in each carton; or

(b) if the case is packed with packages, the number of packages in the case and the weight of the tobacco product in each package.

(4) The words "not for sale in Canada" and "vente interdite au Canada" shall be printed in a conspicuous manner on every package of manufactured tobacco that is to be exported and is intended for delivery

(a) to a foreign duty free shop; or

(b) for use as foreign ships' stores.

STAMPS

4. (1) Subject to subsection (5), every package of the following tobacco products shall be stamped, in a conspicuous place and in a manner that seals the package, with the stamp set out in the applicable schedule, in accordance with the specifications set out in that schedule:

(a) in the case of a package of cigarettes or tobacco sticks, a stamp set out in Schedule 1;

(b) in the case of a package of cigars, a stamp set out in Schedule 2; and

(c) in the case of a package of manufactured tobacco, other than cigarettes or tobacco sticks, a stamp set out in Schedule 3.

(2) Every carton of black stock cigarettes or black stock tobacco sticks shall be stamped on each end with the bilingual stamp set out in Schedule 4, or with the two separate unilingual stamps — one in English and one in French — referred to in that Schedule, in accordance with the specifications set out in that Schedule.

(3) Every case of black stock cigarettes or black stock tobacco sticks shall be stamped in a conspicuous place on any two facing sides with the stamp set out in Schedule 5, in accordance with the specifications set out in that Schedule.

(4) Subject to subsection (5), every package of raw leaf tobacco shall be stamped in a conspicuous place with the stamp set out in Schedule 6, in accordance with the specifications set out in that Schedule, and, if the raw leaf tobacco is further packaged in a manner other than by being formed into a hand, the stamp shall be affixed to the package in a manner that seals the package.

(5) The stamps referred to in subsections (1) and (4) may be modified to include any additional information required by or under the laws of a province in relation to such stamps or modified in accordance with any colour specification required for such stamps by those laws.

PRESCRIBED LIMIT

5. (1) For the purposes of paragraphs 32(2)(j) and 35(2)(c) of the Act, the prescribed limit is five units of tobacco products.

(2) For the purposes of subsection (1), a unit of tobacco products consists of

(a) 200 cigarettes;

(b) 50 cigars;

(c) 200 tobacco sticks; or

(d) 200 g of manufactured tobacco.

TOBACCO MARKING

6. Subject to sections 8 and 9, the bilingual tobacco marking set out in Schedule 7 or the two separate unilingual tobacco markings — one in English and one in French — referred to in that Schedule shall, in a conspicuous manner and in accordance with the specifications set out in that Schedule, be printed on or affixed to the following containers and cases if they are intended for export or delivery to an accredited representative:

(a) every container that contains a tobacco product manufactured in Canada other than cigars, smokeless tobacco or raw leaf tobacco; and

(b) every case that contains cigars, smokeless tobacco or raw leaf tobacco manufactured in Canada.

7. The tobacco marking set out in Schedule 8 shall, in a conspicuous manner and in accordance with the specifications set out in that Schedule, be printed on or affixed to every case that contains

(a) cigars manufactured in Canada and intended for delivery to a duty free shop or for use as ships' stores; or

(b) an imported tobacco product that is intended for delivery to an accredited representative, a duty free shop or a customs bonded warehouse.

PRESCRIBED BRANDS OF TOBACCO PRODUCTS

8. The brands of tobacco products set out in Schedule 9 are prescribed brands for the purposes of subsection 38(3) of the Act.

PRESCRIBED BRANDS OF CIGARETTES

9. Cigarettes exported under a brand set out in Schedule 10 are prescribed cigarettes for the purposes of paragraph 38(4)(a) of the Act.

COMING INTO FORCE

10. These Regulations take effect on July 1, 2003.

SCHEDULE 1 (Paragraph 4(1)(a))

STAMPS FOR PACKAGES OF CIGARETTES AND TOBACCO STICKS

The following specifications apply:

Background Colour: Pantone Peach 713

Text Colour: Process Black 100%

Text Font: Helvetica, minimum 8 point

SCHEDULE 2 (Paragraph 4(1)(b))

STAMPS FOR PACKAGES OF CIGARS

The following specifications apply:

Text Colour: Process Black 100%

Text Font: Helvetica, minimum 8 point

SCHEDULE 3 (Paragraph 4(1)(c))

STAMPS FOR PACKAGES OF MANUFACTURED TOBACCO (OTHER THAN CIGARETTES OR TOBACCO STICKS)

The following specifications apply:

Text Colour: Process Black 100%

Text Font: Helvetica, minimum 8 point

SCHEDULE 4 (Subsection 4(2))

STAMP FOR CARTONS OF BLACK STOCK CIGARETTES AND BLACK STOCK TOBACCO STICKS

^* Alternatively, two separate unilingual stamps, one English and one French, may be used.

The following specifications apply:

Background Colour: Pantone Peach 713

Text Colour: Process Black 100%

Text Font: Helvetica bold, minimum 7 point

Stamp Width: minimum 2.9 cm

Stamp Height: minimum 1.4 cm

Stamp Border: minimum 1.5 point

SCHEDULE 5 (Subsection 4(3))

STAMP FOR CASES OF BLACK STOCK CIGARETTES AND BLACK STOCK TOBACCO STICKS

The following specifications apply:

Text Colour: Process Black 100%

Text Font: Helvetica bold, minimum 36 point

Stamp Width: minimum 19 cm

Stamp Height: minimum 7 cm

Stamp Border: minimum 1.5 point

SCHEDULE 6 (Subsection 4(4))

STAMPS FOR PACKAGES OF RAW LEAF TOBACCO

The following specifications apply:

Text Colour: Process Black 100%

Text Font: Helvetica, minimum 8 point

Note: If the raw leaf tobacco is not further packaged in a manner other than by being formed into a hand, the stamp shall be of sufficient length to be interlaced and wrapped around the hand of tobacco.

SCHEDULE 7 (Section 6)

TOBACCO MARKING FOR CASES OR CONTAINERS OF TOBACCO PRODUCTS MANUFACTURED IN CANADA FOR EXPORT OR DELIVERY TO AN ACCREDITED REPRESENTATIVE

^* Alternatively, two separate unilingual markings, one English and one French, may be used for cartons.

The following specifications apply:

Background Colour: Light Blue for cartons

Text Colour: Process Black 100%

Text Font: Helvetica, minimum 8 point for containers other than cases Helvetica, minimum 36 point for cases

Size: 7 cm x 19 cm for cases

SCHEDULE 8 (Section 7)

TOBACCO MARKING FOR CASES OF TOBACCO PRODUCTS FOR DELIVERY AS SHIPS' STORES OR TO AN ACCREDITED REPRESENTATIVE, A DUTY FREE SHOP OR A CUSTOMS BONDED WAREHOUSE

The following specifications apply:

Text Colour: Process Black 100%

Text Font: Helvetica, minimum 36 point

Stamp Width: minimum 19 cm

Stamp Height: minimum 7 cm

Stamp Border: minimum 1.5 point

SCHEDULE 9 (Section 8)

BRANDS OF TOBACCO PRODUCTS

SCHEDULE 10 (Section 9)

BRANDS OF CIGARETTES

[19-1-o]

Footnote a 

S.C. 2002, c. 22

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