EDM4-8-1 Special containers of wine

Excise Duty Memorandum

October 2007

This version of EDM4-8-1 replaces the one dated April 2007.

Except as otherwise noted, all statutory references in this memorandum are to the provisions of the Excise Act, 2001. The information in this memorandum does not replace the law found in the Act and its regulations. If this information does not completely address your situation, refer to the Act or regulations or contact your regional excise office for additional information. The offices are listed at Contact information – Excise and Specialty Tax Directorate.

The information in this memorandum concerning the markings on special containers of wine is based on the Draft Regulations Respecting the Marking of Special Containers. Any commentary in this memorandum should not be taken as a statement by the Canada Revenue Agency (CRA) that these regulations will in fact be made in their current form.

On this page

• General
• Marked special containers
• Markings on special containers
• Who can mark special containers
• Possession and importation of special containers
• Transportation of special containers
• Warehousing of marked special containers
• Removal of markings from a marked special container
• Removal of wine from a marked special container
• Marked special containers returned to excise warehouse licensee
• Reporting
• Maintaining records
• Offences and penalties

General

Meaning of special container (s 2)

1. The concept of special containers of wine was introduced to address current industry practices. Special containers of wine are containers with a capacity of more than 100 litres. They are used (after having been marked) at bottle-your-own premises in provinces where individuals are permitted to purchase and bottle their own wine.

Capacity and material

2. The maximum capacity and the material of construction of special containers of wine are not restricted under the Act. These containers may be constructed of any material and include steel drums, plastic drums or totes, and wood barrels.

Marked special containers

Meaning of mark and packaged (s 2)

3. To mark a special container of wine means to mark in the prescribed form and manner to indicate that the container is intended for delivery to and use at bottle-your-own premises. Wine in a marked special container is considered to be packaged wine.

Bottle-your-own premises (s 2)

4. Bottle-your-own premises may purchase and use marked special containers of wine on a duty-paid basis. Bottle-your-own premises means premises in which, in accordance with the laws of the province where the premises are located, alcohol is supplied from a marked special container for the purpose of being packaged by a purchaser.

Markings on special containers

What markings must show (Draft Regulations Respecting the Marking of Special Containers s 1 and 3)

5. The markings on a special container of wine must:

• be legible and clearly visible during normal handling;
• be capable of remaining in place until the container is emptied; and
• indicate, in English and French, that the content is packaged wine and that the container is intended for delivery to, and for use at, a bottle-your-own premises.

Who can mark special containers

Domestic wine (ss 83(1))

6. Wine licensees are the only persons authorized by the Act to mark special containers of domestic wine.

Marking imported special containers (s 84 and 85)

7. Where a special container of wine imported by an excise warehouse licensee is not marked when it is reported under the Customs Act, it must be placed in a sufferance warehouse where the excise warehouse licensee, or any person, may mark the special container.

Meaning of sufferance warehouse

8. A sufferance warehouse has the same meaning as in subsection 2(1) of the Customs Act.

Possession and importation of special containers

Unmarked special containers

9. Wine placed in a special container that is not marked with the prescribed information is considered to be bulk wine. Only persons authorized by the Act (that is, wine licensees, licensed users or alcohol registrants) may possess bulk wine.

Marked special containers (ss 88(3))

10. Wine in a marked special container is considered to be packaged wine. The following persons may possess non-duty-paid marked special containers of wine:

• an excise warehouse licensee in its excise warehouse;
• a prescribed person who is transporting the special container of wine under prescribed circumstances and conditions, as described in paragraph 13 of this memorandum; or
• a sufferance warehouse licensee in their sufferance warehouse, if the special container is imported.

Importing special containers

11. Only an excise warehouse licensee may import marked special containers of wine.

Transportation of special containers

Unmarked containers (para 70(2)(b), 70(2)(c) and 70(2)(d))

12. Wine in a special container that is not marked with prescribed information is considered to be bulk wine and, accordingly, may only be transported by:

• a wine licensee;
• a licensed user who imported the wine or if the wine was produced or imported by a wine licensee; or
• an alcohol registrant, if the wine was imported by a licensed user or the wine was produced or imported by a wine licensee.

Marked containers (ss 88(3), Regulations Respecting the Possession of Non-duty-paid Packaged Alcohol s 2)

13. A non-duty-paid marked special container of wine may be transported by:

• a person licensed as a customs bonded carrier if the special container is imported; or
• a person with documentation that provides evidence that they are transporting the special container on behalf of an excise warehouse licensee.

Warehousing of marked special containers

14. Wine in a special container of wine is deemed to be packaged wine at the time the container is marked with the prescribed information as outlined in paragraph 5 of this memorandum. At that time, duty on the wine must be paid or the wine must be entered into an excise warehouse.

Imported container to be warehoused (s 86)

15. In the case of non-duty-paid imported marked special containers of wine, the excise warehouse licensee who imports the container must immediately enter it into its excise warehouse when the wine is released under the Customs Act.

When duty payable (ss 136(1))

16. Duty is payable on wine in a marked special container when it is removed from an excise warehouse for entry into the duty-paid market (that is, when it is sent to a bottle-your-own premises). The duty is payable by the excise warehouse licensee.

Removal of markings from a marked special container

Returning to bulk inventory (s 156)

17. A wine licensee who has marked a special container of wine may remove the container from its excise warehouse and return the wine to their bulk wine inventory if the licensee removes the container's marking in an approved manner.

Approved manner of removing markings from a special container

18. A wine licensee who wishes to return wine from a marked special container to their bulk wine inventory must ensure that the markings on the container of wine are fully removed, covered or obscured in a manner that renders them illegible.

Contacting the CRA

19. Wine licensees must contact their regional excise office for approval of their method of removing the markings. The offices are listed at Contact information – Excise and Specialty Tax Directorate.

Bulk wine inventory

20. Once the markings are removed, the wine in a special container is no longer considered to be packaged wine and must be returned to the bulk wine inventory of the wine licensee.

Documentation

21. Wine licensees must ensure that they retain adequate records to document any wine that is returned to their bulk wine inventory.

Removal of wine from a marked special container

Removal of wine (ss 93(1))

22. A purchaser of the wine at bottle-your-own premises is the only person who may remove wine from a marked special container.

Exception – Returned container (ss 93(2))

23. An excise warehouse licensee may remove the wine from a marked special container that has been returned by an operator of bottle-your-own premises for the purpose of destroying the wine in a manner approved by the CRA.

Marked special containers returned to excise warehouse licensee

Refund – Wine in special containers (para 187(a))

24. When a marked special container of wine is returned to the excise warehouse licensee who supplied it, and who paid the duty on the wine, that licensee may apply for a refund of the excise duty paid on the quantity of wine remaining in the marked special container, provided that the licensee destroys the wine in the approved manner.

Time limits (para 187(b))

25. The excise warehouse licensee must apply for a refund within two years after the container is returned to their warehouse.

Contacting the CRA

26. Excise warehouse licensees must contact their regional excise office for approval of the method of destroying wine.

27. Additional information on refunds of excise duty is available in Memorandum EDM10-3-1, Refunds.

Reporting

By a wine licensee

28. Bulk wine removed from a wine licensee's inventory for packaging in a marked special container, or returned to bulk inventory, should be reported on Form B265, Excise Duty Return – Wine Licensee, as follows:

• Under "Reductions to bulk wine inventory / Removed to packaging activities: Packaged in marked special containers" in the relevant column, enter the total quantity of bulk wine that has been removed and placed in marked special containers.
• Under "Additions to bulk wine inventory / Packaged wine returned to bulk wine inventory" in the relevant column, include the total quantity of wine that has been returned to bulk inventory from marked special containers.

By an excise warehouse licensee

29. Marked special containers of wine entered into an excise warehouse, returned to bulk inventory of a wine licensee, or removed to the duty-paid market from an excise warehouse should be reported on Form B262, Excise Duty Return – Excise Warehouse Licensee, as follows:

• Under "Additions to inventory / Domestic wine" or "Additions to inventory / Imported wine" in the relevant column, enter the total quantity of wine in marked special containers that has been entered into an excise warehouse.
• Under "Additions to inventory / Returned from duty-paid sources" or "Additions to inventory / Returned from non-duty paid sources" in the relevant column, enter the total quantity of wine in marked special containers that has been returned from the relevant source.
• Under "Reductions to inventory: non-duty-paid / Returned to wine licensee" in the relevant column, enter the total quantity of wine that has been removed from packaged inventory and returned to a wine licensee.
• Under "Reductions to inventory: duty-paid / Packaged in marked special containers" in the relevant column, enter the total quantity of wine in marked special containers that has been removed from the excise warehouse and upon which duty has been paid.

Maintaining records

Keeping records (ss 206(1))

30. Every licensee under the Act is required to maintain all records that are necessary to determine whether it is in compliance with the Act.

31. Failure by a licensee to adequately account for the wine in its possession may result in an assessment or enforcement action, as provided for in the Act.

32. Additional information on the requirement to maintain records is available in Memorandum EDM9-1-1, General requirements for records.

Offences and penalties

Failure to comply

33. If a person fails to comply with the restrictions of their licence or registration, they may be guilty of an offence or subject to a penalty under the Act.

34. Additional information on offences and penalties is available in Memorandum EDM1-6-1, Administrative penalties under the Excise Act, 2001.

Further information