Vol. 137, No. 41 — October 11, 2003

Regulations Amending the Ships' Stores Regulations

Statutory Authority

Customs Tariff and Excise Tax Act

Sponsoring Agency

Canada Customs and Revenue Agency

REGULATORY IMPACT
ANALYSIS STATEMENT

Description

The Ships' Stores Regulations are being amended as a result of the Excise Act, 2001 and to respond to a Federal Court of Appeal decision.

On May 10, 2001, the Federal Court of Appeal ruled that the Ships' Stores Regulations, which are made under the Customs Tariff and the Excise Tax Act, went beyond the scope of their enabling authority, and that they would cease to have effect as of October 1, 2001. These Regulations prescribe the scope of relief from the payment of duties and taxes on certain goods for use as ship's stores on prescribed classes of conveyances. The Court found that the criteria used in the Regulations to define the designated classes of vessels were not supported by the prescribing authority in the Acts.

A Notice of Ways and Means Motion was tabled in the House of Commons on September 27, 2001, in response to the Court's decision. The same day, the former Minister of National Revenue, the Honourable Martin Cauchon, released a draft of the proposed amendments to the Ships' Stores Regulations.

The changes to the Customs Tariff and the Excise Tax Act were officially introduced in Bill C-47. This Bill was tabled in the House of Commons in December 2001 and the Excise Act, 2001, An Act respecting the taxation of spirits, wine and tobacco and the treatment of ships' stores, received Royal Assent on June 13, 2002.

The Ships' Stores Regulations are being amended to ensure that duty and tax relief for ships' stores used on tugs, ferries and passenger ships operating on the Great Lakes and lower St. Lawrence River is provided only to the extent that the ships' stores are consumed on vessels engaged in international trade. To that effect, the current definition of "inland waters ship" is being amended and a number of new related definitions pertinent to ships' stores relief for maritime vessels are being added.

The Regulations are also being amended, as a result of the Excise Act, 2001, to replace the words "tobacco products" with "domestic or imported cigars and domestic stamped manufactured tobacco or imported manufactured tobacco", to reflect the new excise regime limitations, to incorporate by reference definitions included in other excise legislation, and to replace the word "eaux-de-vie" with "spiritueux" in the French version, to mirror the French terminology used in the Excise Act, 2001.

Alternatives

There are no other practical alternatives to this proposal. These amendments are either in response to the Federal Court of Appeal's decision rendered in May 2001 or consequential to the enactment of the new Excise Act, 2001.

Benefits and Costs

These amendments are consequential to the new Excise Act, 2001 regime or are introduced in response to a decision of the Federal Court of Appeal. There will not be any additional costs to the Agency as a result of these amendments.

To provide adequate time for ship operators affected by the narrowing of duty and tax relief to make the transition to the new rules, the Excise Tax Act, as amended by the Excise Act, 2001, introduced a temporary fuel tax rebate program.

Consultation

Certain amendments to the Regulations respond to a decision rendered by the Federal Court of Appeal in May 2001 that the Ship's Stores Regulations are not in full accordance with the authority in their enabling legislation.

The remaining amendments are consequential to the Excise Act, 2001 and, therefore, were indirectly the subject of extensive consultations with stakeholders affected by the Act. Personal presentations and meetings were also held with industry groups expressing interest, and their comments and suggestions were actively sought and taken into consideration.

The Department of Finance was consulted with respect to these changes and supports the proposed amendments.

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 Ships' Stores Regulations.

Contact

John Kiefl, Manager, Release and Warehouse Programs, Import Process Division, Operational Policy and Co-ordination Directorate, Customs Branch, Canada Customs and Revenue Agency, 8th Floor, Sir Richard Scott Building, 191 Laurier Avenue W, Ottawa, Ontario K1A 0L5, (613) 957-8690 (Telephone), (613) 957-8630 (Facsimile), John.Kiefl@ccra-adrc.gc.ca (Electronic mail).

PROPOSED REGULATORY TEXT

Notice is hereby given that the Governor in Council, pursuant to paragraphs 99(g) (see footnote a)  and (g.1) (see footnote b)  of the Customs Tariff (see footnote c) and subsection 59(3.2) (see footnote d)  of the Excise Tax Act, proposes to make the annexed Regulations Amending the Ships' Stores 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 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, 4^th floor, 150 Isabella 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 a consent to disclosure for the purposes of that Act.

Ottawa, October 9, 2003

EILEEN BOYD
Assistant Clerk of the Privy Council

REGULATIONS AMENDING THE SHIPS' STORES REGULATIONS

AMENDMENTS

1. (1) Section 2 of the Ships' Stores Regulations (see footnote 1)  is renumbered as subsection 2(1).

(2) The definitions "inland waters ship" and "reasonable quantity" in subsection 2(1) of the Regulations are replaced by the following:

"inland waters ship" means a ship, other than an eligible ship as defined in subsection 68.5(1) of the Excise Tax Act, engaged in trade on an inland voyage, as defined in that subsection; (navire d'eaux internes)

"reasonable quantity", with respect to domestic or imported cigars or domestic stamped manufactured tobacco or imported manufactured tobacco, means a quantity not exceeding 200 cigarettes, 50 cigars, 200 grams of manufactured tobacco and 200 tobacco sticks; (quantité raisonnable)

(3) Section 2 of the Regulations is amended by adding the following after subsection (1):

(2) In these Regulations, the words "alcohol", "beer", "cigar", "cigarette", "excise warehouse", "manufactured tobacco" and "stamped" have the same meaning as in the Excise Act, 2001.

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

(c) souvenirs, gifts, edible supplies, wines, spirits, ales, beers, domestic or imported cigars or domestic stamped manufactured tobacco or imported manufactured tobacco that are sold on board the conveyance, unless it is a Canadian warship that is described in column I of subitem 3(1) of the schedule, for consumption outside Canada; or

(2) Paragraph 3(3)(b) of the Regulations is replaced by the following:

(b) prepare a written inventory of the wines, spirits, ales, beers, and domestic or imported cigars or domestic stamped manufactured tobacco or imported manufactured tobacco remaining on board at the end of the 30^th day of that period.

3. Section 7 of the French version of the Regulations is replaced by the following:

7. Au Canada, il est interdit de prendre à bord d'un moyen de transport visé à la colonne I de l'article 2 de l'annexe des provisions de bord qui sont destinées à être cédées à un navire qui est affecté à la pêche, à la chasse aux phoques ou à la pêche à la baleine à l'étranger.

4. The schedule to the Regulations is amended by replacing "tobacco products" with "domestic or imported cigars and domestic stamped manufactured tobacco or imported manufactured tobacco" in the following provisions:

(a) paragraph 1(1)(r);

(b) paragraph 1(2)(r);

(c) paragraph 1(3)(r);

(d) paragraph 1(4)(r);

(e) paragraph 1(5)(r);

(f) paragraph 2(1)(e);

(g) paragraph 2(2)(c);

(h) paragraph 3(1)(g);

(i) paragraph 3(2)(g);

(j) paragraph 4(1)(i);

(k) paragraph 4(2)(i);

(l) paragraph 5(c); and

(m) paragraph 6(c).

5. The schedule to the French version of the Regulations is amended by replacing "eaux-de-vie" with "spiritueux" in the following provisions:

(a) paragraph 1(1)(p);

(b) paragraph 1(2)(p);

(c) paragraph 1(3)(p);

(d) paragraph 1(4)(p);

(e) paragraph 1(5)(p);

(f) paragraph 2(1)(d);

(g) paragraph 2(2)(b);

(h) paragraph 3(1)(f);

(i) paragraph 3(2)(f);

(j) paragraph 4(1)(g);

(k) paragraph 4(2)(g);

(l) paragraph 5(b); and

(m) paragraph 6(b).

COMING INTO FORCE

6. (1) Subject to subsection (2), these Regulations are deemed to have come into force on July 1, 2003.

(2) The definition "inland waters ship" in section 2 of the Ships' Stores Regulations, as enacted by subsection 1(2) of these Regulations, is deemed to have come into force on June 1, 2002.

[41-1-o]

Footnote a 

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

Footnote b 

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

Footnote c 

S.C. 1997, c. 36

Footnote d 

S.C. 2002, c. 22, s. 427(1)

Footnote 1 

SOR/96-40

NOTICE:
The format of the electronic version of this issue of the Canada Gazette was modified in order to be compatible with hypertext language (HTML). Its content is very similar except for the footnotes, the symbols and the tables.

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