I just had the exact same conversation with Gary Dare at the firearms center today in fact. He told me exactly the same thing, to shorten an AR barrel below 16" makes the barrel a prohibited item. The reason I asked is that we have a contract on the works with 1 of the bigger importers and because the DOS will no longer approve exports of short barrelled ARs or anything with a threaded muzzle, they want to solve this problem in Canada.
We as a manufacture can and are making short barrels for the ARs but by law can NOT shorten 1 made by someone else below 16".
Having FAR too much to loose will take Garys advise and refrain from cutting down barrels, if Epps wants to wander into the grey area of the criminal code good for them.