Excise Tax Act — E-15 179
ther is a carrier that is acquiring physical possession of the property for the sole purpose of shipping the property or does not claim an input tax credit in respect of the property, the bailee is deemed not to have acquired physical possession of the property. Fungible property (7.1) For the purposes of this section, substitute tangible personal property is deemed to be the original tangible personal property if (a) one of the following conditions is met: (i) a registrant acquires physical possession of the original tangible personal property for the purpose of making a supply of a service of manufacturing or producing tangible personal property (in this subparagraph referred to as the “manufactured property”) and the substitute tangible personal property is used or consumed by being (A) incorporated or transformed into, attached to, or combined or assembled with, the manufactured property in the manufacture or production of the manufactured property, or (B) directly consumed or expended in the manufacture or production of the manufactured property, (ii) the following conditions are met: (A) a registrant acquires physical possession of the original tangible personal property for the purpose of making a supply of a commercial service in respect of that property, (B) if the commercial service is not a storage service, a service identical to the commercial service is performed in respect of the substitute tangible personal property, (C) the registrant causes physical possession of the substitute tangible personal property to be transferred to another person under the agreement for the supply, and (D) if the substitute property is a continuous transmission commodity, the substitute tangible personal property is not being transferred to the other person by means of a wire, pipeline or other conduit, or (iii) a registrant acquires physical possession of the original tangible personal property for the purpose of making a supply of a commercial service in respect of tangible personal property (in this subparagraph referred to as the “serviced property”) that is neither the original tangible personal property nor the substitute tangible personal property and the substitute tangible personal property is used or consumed by being (A) incorporated into, attached to, or combined or assembled with, the serviced property in the provision of the commercial service, or (B) directly consumed or expended in the provision of the commercial service; and (b) the properties of the original tangible personal property are essentially identical to the properties of the substitute tangible personal property and the original tangible personal property and the substitute tangible personal property (i) are of the same class or kind of property, (ii) are in the same measure and state, and (iii) are interchangeable for commercial purposes. Beginning of lease from unregistered non-resident (8) For the purposes of this section and the definition imported taxable supply in section 217, if (a) a registrant (in this subsection referred to as the “lessee”) (i) is the recipient of a particular taxable supply of tangible personal property made by way of lease, licence or similar arrangement by a particular non-resident person that is not registered under Subdivision D of Division V, and (ii) is not deemed under clause (9)(c)(ii)(A) or subparagraph (9)(d)(ii) to have acquired physical possession of the property as the recipient of the particular taxable supply, (b) either (i) immediately before the particular time at which the property is delivered or made available to the lessee under the agreement for the particular taxable supply, another registrant has possession or use of the property as the recipient of another taxable supply of the property made by way of lease, licence or similar arrangement by the particular non-resident person or by another non-resident person that is not registered under Subdivision D of Division V, or (ii) the following conditions are m