http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/66808/index.do 
International Custom Pak Inc. v. The Queen[1] (February 11, 2014) is an odd case involving duty payable under the
Excise Act, 2001[2] on alcohol used in sanitizing gels. While the formula for the gels had been approved by Health Canada it had not, during the periods in question, been approved by CRA (a pre-condition to exemption from duty):
[3] In its notice of appeal, the appellant mentions that it was approached during the H1N1 pandemic to manufacture sanitizing gels. Due to the urgency of the situation, it started manufacturing the sanitizing gels while simultaneously working to complete the formulation submission for Canada Revenue Agency (CRA) approval.
[4] The appellant stated that their knowledge in “formulation development” and their use of sanitizing ingredients that were common in the industry assured them that the new sanitizing gel would be equal in performance and safety to the sanitizing spray previously approved by the CRA. In addition, the sanitizing gel formulation had already been approved by Health Canada’s Natural Health Products Directorate and been given a Natural Health Product number.
[5] The appellant also stated in its notice of appeal that a lengthy wait time for CRA approval could have cost it this business. Their intent was merely to expedite delivery of the products so to as retain business and provide timely service to a public in urgent need of the sanitizers.
[6] The appellant acknowledged that it did not comply with section 73 of the Act, which prohibits a licensed user from using or disposing of bulk alcohol other than, among other things, in an approved formulation. It also acknowledged that duty must be imposed for the infraction committed, but requested that, as a matter of fairness, this Court consider reducing the amount of duty assessed, given the unintentional nature of the offence.
The Tax Court was not impressed by the appellant’s fairness submissions:
[15] Here, the appellant seeks relief based on fairness. This Court does not have the authority to provide such relief. There is no provision in the Act that grants the judiciary authority to deviate from the strict application of its provisions.
[16] Further, it is not open to the Court to make exceptions to statutory provisions on the grounds of fairness or equity (
Chaya v. The Queen, 2004 FCA 327, 2004 DTC 6676, at paragraph 4).
[17] I would also add that I am not convinced that the appellant was not negligent in failing to comply with the Act. According to the evidence, the Minister’s approval was received in fairly short order after the request was made. As a matter of fact, as soon as the request was made by the auditor to the senior chemist, the latter advised the auditor that the submissions were “nominally” approved on the day they were received, so that alcohol used in production as of that day would not be subject to duty (Exhibit R-3, page 6). This tends to show, in my view, that had the appellant submitted the form right at the beginning and had Mr. Adatia checked the “urgent” box on that form (Exhibit R-2), the appellant could have avoided the duty completely.
[18] Finally, the appellant was only assessed the duty payable on the alcohol. It could have faced a harsher situation had the Minister imposed a penalty. Indeed, under paragraph 243(1)(a) of the Act, every person who produces spirits in a manner that contravenes section 73 (which is the case here) is liable to a penalty equal to 200% of the duty that was imposed on the spirits. In my view, by not having that penalty imposed against it, the appellant has already benefited from significant lenience.
In the result the Tax Court dismissed the appeal.
[1] 2014 TCC 44.
[2] S.C. 2002, c. 22.