This particular charge is not exactly clear cut. It's open to some interpretation and that's probably done purposely to give officers some leeway. It's not a charge where it's either you had a muffler or not.
75 (1) Every motor vehicle or motor assisted bicycle shall be equipped with a muffler in good working order and in constant operation to prevent excessive or unusual noise and excessive smoke, and no person shall use a muffler cut-out, straight exhaust, gutted muffler, hollywood muffler, by-pass or similar device upon a motor vehicle or motor assisted bicycle. R.S.O. 1990, c. H.8, s. 75 (1).
The keywords here are "and" and "or."
"and in constant operation to prevent excessive or unusual noise"
So it's just not enough to have a muffler, but it must also cut back on noise.
What exactly is noise? Well, there's no straight forward answer. The law doesn't specify what is and isn't loud. There are local municipality that may dictate a dBA level and those would fall under noise control by-laws which control various everyday nuisances. Within that last couple years, some municipalities have added vehicle noise to that list. Example, Oakville added to their noise bylaw to target motorcycles producing over 92 decibels.
A lot of people believe the Highway Traffic Act has similar restrictions where someone quite literally measures the noise an exhaust produces. It doesn't. The short answer is "noise" would be considered anything that an officer feels could impact their ability to to their job or may affect the safety of others on the road.
An ideal solution would be that you book an early resolution meeting if that's an option. Assuming you are the first owner of the vehicle, you could explain that the vehicle does indeed have a muffler, it's factory, it's in good working order and best case have that confirmed by a mechanic. Maybe they let it go.
Then it becomes an issue of whether or not all of this is going to be worth your time. That's a personal decision that you'd have to answer. I don't have any indication that a muffler ticker would impact insurance rates. You can always call your provider to double check.
There's also worst case scenario. They'll consider it loud, they don't care how you bought it, and ultimately you're responsible for the vehicle regardless of how it was sold to you. Then you'll have a trial where you could plead your case.