Hurley and Collector of Customs - [2021] AATA 3381

Hurley and Collector of Customs [2021] AATA 3381 (21 September 2021)
Division: TAXATION AND COMMERCIAL DIVISION
File Numbers: 2017/7050, 2017/7566, 2017/7568, 2017/7569
Re:Laurence Hurley
APPLICANT

AndCollector of Customs
RESPONDENT

DECISION
Tribunal:Deputy President Boyle
Date:21 September 2021
Place:Perth

Application 2017/7566: The decision of the Collector dated 13 December 2017 to make demand for payment of an amount of $1,090,499.27 is set aside and in substitution for that decision there is a decision to make demand for payment of an amount of $424,712.30.
Application 2017/7050: The decision of the Collector dated 3 November 2017 to make demand for payment of an amount $83,027.54 is affirmed.
Application 2017/7568: The decision of the Collector dated 13 December 2017 to make demand for payment of an amount of $505,374.41 is set aside and in substitution for that decision there is a decision not to make a demand.
Application 2017/7569: The decision of the Collector dated 13 December 2017 to make demand for payment of an amount of $690,481.38 is affirmed.
...[SGD].....................................................................
Deputy President Boyle
CATCHWORDS
CUSTOMS – decisions of the Collector to issue statutory demands for payment of duty – alcohol as a dutiable good – whether there was a failure to keep the dutiable goods safely pursuant to s 35A(1)(a) of the Customs Act – periodic settlement permission (PSP) to deliver alcoholic beverages into home consumption without payment of duty applied – Caltex principles applied – Applicant failed to keep the dutiable goods safely pursuant to s 35A(1)(a)
LEGISLATION
Acts Interpretation Act 1901 (Cth) s 15AA
Administrative Appeals Tribunal Act 1975 (Cth) ss 26, 37, 43(1), 43(1)(c), 43(1)(c)(i), 43(1)(c)(ii)
Customs Act 1901 (Cth) ss 4, 4(1), 30, 30(1)(a)(vi), 30(1B)(b), 35A, 35A(1), 35A(1)(a), 35A(1)(b), 35A(4)(a), 37, 68(3A), 69, 69(1), 69(5), 69(8)(h), 79, 99(2), 132AA(1), 132AA(4) item 1, 165, 273GA
Customs Tariff Act 1995 (Cth) ss 15, 16, 19AA, Sch 3 ch 22
Excise Act 1901 (Cth) s 60, 60(1), 60(1)(a), 60(1)(b), 61C
CASES
Caltex Australia Petroleum Pty Ltd v Federal Commissioner of Taxation (2008) 173 FCR 359; [2008] FCA 1951
Chief Executive Officer of Customs v Tony Longo Pty Ltd (2001) 52 NSWLR 458; [2001] NSWCA 147
Collector of Customs (NSW) v Southern Shipping Company Limited (1962) 107 CLR 279; [1962] HCA 20
Comptroller General of Customs v Zappia (2018) 265 CLR 416; [2018] HCA 54
Drew v Dibb (2008) 169 FCR 320; [2008] FCA 1057
Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22
Moama Refinery Ltd v Chief Executive Officer of Customs (2001) 115 FCR 205; [2001] FCA 1287
Nowicka v Superannuation Complaints Tribunal (2008) 176 FCR 1; [2008] FCAFC 191
Pearce v Coynes Freight Management Group Pty Ltd (2010) 183 FCR 540; [2010] FCA 320
Ramsay v Sunbuild Pty Ltd (2014) 221 FCR 315; [2014] FCA
R v Lyon (1906) 3 CLR 770 at 784
Sidebottom v Giuliano (2000) 98 FCR 579; [2000] FCA 607
Sogo Duty Free Pty Ltd v Commissioner of Taxation [2010] FCA 976
SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362; [2017] HCA 34
Walker v Wilson (1991) 172 CLR 195
SECONDARY MATERIALS
Commonwealth, Parliamentary Debates, House of Representatives, 8 May 1957 (Frederick Osborne)
REASONS FOR DECISION
Deputy President Boyle
21 September 2021
THE APPLICATIONS

The Applicant seeks review of four decisions of the Respondent, one dated 3 November 2017[1] and three dated 13 December 2017.[2] By these decisions the Respondent determined that the Applicant:
(a)had, or had been entrusted with, the possession, custody or control of certain dutiable goods (being alcohol) that were subject to customs control;
(b)failed to keep those dutiable goods safely pursuant to s 35A(1)(a) of the Customs Act 1901 (Cth) (the Act); and
(c)is liable, in accordance with the four statutory demands issued pursuant to s 35A of the Act, to pay to the Commonwealth of Australia an amount equal to the amount of the duty of Customs which would have been payable on those goods if they had been entered for home consumption on the day on which the demands were made, in the following amounts: $83,027.54,[3] $505,374.41,[4] $690,481.38[5] and $1,090,499.27.[6]
[1] T67.
[2] T70; T71; T72.
[3] T67.
[4] T70.
[5] T71
[6] T72
The Respondent seeks to withdraw the decision to issue the demand for payment of $505,374.41.[7]
[7] T70.
THE LEGISLATION
Duties of Customs (customs duties) are imposed on dutiable goods by the Customs Tariff Act 1995 (Cth) (CTA).[8] Section 4 of the Act defines “Dutiable goods” as including all goods in respect of which any customs duty is payable. Alcoholic beverages are dutiable goods on which customs duty is payable at the rates calculated in accordance with s 19AA of the CTA. Customs duty is payable as a debt to the Commonwealth by the owner of the goods.[9]
[8] CTA ss 15, 16, 19AA, Sch 3 ch 22.
[9] The Act s 165.
Section 4(1) of the Act defines “Owner of goods”, relevantly, as including:
… any person (other than an officer of Customs) being or holding himself or herself out to be the owner, importer, exporter, consignee, agent, or person possessed of, or beneficially interested in, or having any control of, or power of disposition over the goods.
The majority of the High Court (Kiefel CJ, Bell, Gageler and Gordon JJ) in Comptroller General of Customs v Zappia[10] summarised the operation of and policy behind the relevant law as follows:
[10] (2018) 265 CLR 416; [2018] HCA 54.
3…The customs duty on the goods "follows the goods until the duties are paid" and "a personal liability arises in the case of any person who becomes owner of the goods before the duties are paid".
4By operation of s 30 of the Act, goods imported into Australia become subject to "customs control" and remain subject to customs control until either exported from Australia or delivered into home consumption in accordance with an authority or permission under the Act. Ordinarily, an authority to deliver goods into home consumption must be given by a "Collector", who can be the Comptroller-General of Customs (who has the general administration of the Act) or an officer of Customs, after goods have been entered for home consumption and any applicable customs duty has been paid. During the period in which the goods remain subject to customs control, the goods cannot be moved, altered or interfered with except as authorised by or under the Act.
5The statutory policy which underlies that operation of s 30 was identified by O'Connor J soon after the enactment of the Act. Because goods become difficult to trace once delivered into home consumption or "circulation", goods must "from the time they are first imported until duty is paid ... be kept under customs control" for the protection of the revenue.
6That statutory policy continues in the Act, which, in its amended form, must be read as an integrated whole. Relevantly, the policy informs interlocking provisions of the Act designed to facilitate the warehousing of imported goods prior to those goods being entered for home consumption. Where goods are imported, the owner of the goods has the option of entering them for warehousing as an alternative to immediately entering them for home consumption. Where the goods are entered for warehousing and any applicable charges or fees have been paid, an authority must be given to the owner of the goods to take the goods into warehousing. The warehoused goods must then be stored in a licensed warehouse where they remain subject to customs control under s 30 until such time as the goods are entered for home consumption and a further authority is given, after payment of the applicable customs duty.
…
8 The "holder of a warehouse licence" is subject to a number of specific obligations. One of them is that the holder "must not permit warehoused goods to be delivered for home consumption" unless the goods "have been entered for home consumption" and "an authority to deal with them is in force".
(Footnotes omitted.)
Section 30 of the Act relevantly provides:
Customs control of goods
(1)Goods shall be subject to customs control as follows:
(a) as to goods to which section 68 applies that are unshipped or that are a ship or aircraft not carried on board a ship or aircraft—from the time of their importation:
(ii) if the goods are not examinable food that has been entered for home consumption or warehousing and are not excise‑equivalent goods—until either they are delivered into home consumption in accordance with an authority to deal or in accordance with a permission under section 69, 70 or 162A or they are exported to a place outside Australia, whichever happens first; and
…
(vi) if the goods are excise‑equivalent goods and are not examinable food—until whichever of the events mentioned in subsection (1B) happens first;
…
(1B) The events for the purposes of subparagraph (1)(a)(vi) are as follows:
(a) excisable goods are manufactured and the excise‑equivalent goods are used in that manufacture;
(b) the excise‑equivalent goods are delivered into home consumption in accordance with an authority to deal or in accordance with a permission under section 69, 70 or 162A;
…
Section 35A(1) of the Act provides:
Where a person who has, or has been entrusted with, the possession, custody or control of dutiable goods which are subject to customs control:
(a)fails to keep those goods safely; or
(b)when so requested by a Collector, does not account for those goods to the satisfaction of a Collector in accordance with section 37;
that person shall, on demand in writing made by a Collector, pay to the Commonwealth an amount equal to the amount of the duty of Customs which would have been payable on those goods if they had been entered for home consumption on the day on which the demand was made.
Section 37 of the Act provides:
A person accounts for goods or a part of goods to the satisfaction of a Collector in accordance with this section if, and only if:
(a) the Collector sights the goods; or
(b) if the Collector is unable to sight the goods--the person satisfies the Collector that the goods have been dealt with in accordance with this Act.
Section 69(1) of the Act relevantly provides:
(1)A person may apply to the Collector for permission to deliver into home consumption like customable goods or excise equivalent goods:
(a) of a kind specified in the application; and
(b) to which section 68 applies;
without entering them for that purpose:
…
Section 165 of the Act relevantly provides:
(1)An amount of duty that is due and payable in respect of goods:
(a) is a debt due to the Commonwealth; and
(b) is payable by the owner of the goods.
…
(3)The Comptroller-General of Customs may make, in writing, a demand for payment of an amount that is a debt due to the Commonwealth under subsection (1) or (2) or subsection 278(2).
(4)A demand, under subsection (3), for payment of an amount must specify the amount and include an explanation of how it has been calculated.
Section 273GA of the Act relevantly provides that:
(1)Subject to this section, applications may be made to the Administrative Appeals Tribunal for review of the following:
…
(a) a decision of a Collector under section 35A making a demand;
THE FACTS
The parties filed a statement of agreed facts. The material facts as agreed, where relevant, are identified in these reasons for decision.
THE ISSUES
Paragraph 44 of the Respondent’s Amended Statement of Facts, Issues and Contentions dated 27 August 2020 (RASFIC) identified four relevant issues for determination by the Tribunal. They were:
Issue 1: was the Applicant a person who had or had been entrusted with the possession, custody or control of the dutiable goods?
Issue 2: did the Applicant fail to keep safely the dutiable goods that are the subject of the s 35A demands made to the Applicant?
Issue 3: can a demand under s 35A be issued to the Applicant in his circumstances (including, in circumstances where demands were issued to the corporate warehouse licensee, Liquor Traders Australia Pty Ltd (LTA), for the same underlying debts, and where the Applicant is the sole director of LTA)?
Issue 4: what relevance does the LTA DOCA (deed of company arrangement) and any past payments by LTA have on the demands issued to the Applicant?
The Applicant’s Statement of Facts, Issues and Contentions dated 25 September 2020 (ASFIC) included:
36. [44] of the [RASFIC] states 4 issues. The Applicant only pursues Issue 2.
37.The Applicant formally concedes Issue 1, in light of the decision in Zappia. The Applicant accepts the Respondent’s contentions as to Issue 3 and Issue 4.
While issue 2 as identified by the Respondent is stated in simple terms, the determination of that issue does require the resolution of a number of sub-issues. These become apparent in these reasons for decision.
THE HEARING AND THE EVIDENCE
The application was heard on 31 May 2021. The Applicant was represented by Mr J Cook and the Respondent was represented by Mr J Slack-Smith. I had before me the documents lodged by the Respondent in accordance with s 37 of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) (T documents) and the statement of agreed facts. The parties also filed various Statements of Facts, Issues and Contentions and outlines of submissions.
THE PARTIES’ SUBMISSIONS
The Respondent
The Respondent provided an outline of submissions on 24 May 2021 (ROS) which was to the following effect:
(a)The facts relied on are taken from the statement of agreed facts.
(b)LTA imported alcoholic beverages, which were dutiable goods, into Australia. The Applicant was the sole director of LTA and had sole control of, and responsibility for, its business. Accordingly, he had, or had been entrusted with, the possession, custody or control of the dutiable goods imported by LTA.
(c)LTA had permission (called a “periodic settlement permission” (PSP)) to deliver alcoholic beverages into home consumption without the prior payment of duty on the condition that it would pay the duty by a specific time afterwards. It delivered alcoholic beverages into home consumption but did not pay the duty within time or at all.
(d)The issue is whether the Applicant “fail[ed] to keep those [alcoholic beverages] safely” within the meaning of s 35A(1)(a) of the Act.
(e)The purpose of s 35A is the protection of the revenue.
(f)A “fail[ure] to keep… goods safely” includes delivering goods into home consumption but failing to pay duty on those goods, irrespective of when the duty was payable.
(g)It is unnecessary for the dutiable goods to be subject to customs control when the “fail[ure]” occurred.
(h)The proposition in (f) and (g) is supported by Caltex Australia Petroleum Pty Ltd v Federal Commissioner of Taxation.[11]
[11] (2008) 173 FCR 359; [2008] FCA 1951.
(i)In the alternative to (g), the alcoholic beverages delivered into home consumption by LTA continued to be subject to customs control.
(j)The starting point for the ascertainment of the meaning of s 35A(1)(a) of the Act is its text, but regard is to be had to its context and purpose.[12] In interpreting the provision, the interpretation that would best achieve the purpose and object of the Act is to be preferred to each other interpretation.[13]
[12] Citing SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362; [2017] HCA 34 at [14] (Kiefel CJ, Nettle and Gordon JJ).
[13] Citing Acts Interpretation Act 1901 (Cth) s 15AA.
(k)Section 35A has a close analogue in s 60 of the Excise Act 1901 (Cth) (Excise Act), which was considered by the High Court in Collector of Customs (NSW) v Southern Shipping Company Limited.[14]
[14] (1962) 107 CLR 279; [1962] HCA 20.
(l)In Southern Shipping Taylor J explained that the obvious purpose and object of s 60 of the Excise Act was to ensure that the excise revenue shall not suffer if excisable goods, by some irregular means, find their way into home consumption.[15]
[15] Citing Southern Shipping at 295 (Taylor J);
(m)In Zappia the plurality said that s 35A must be read in light of the statutory purpose of subjecting dutiable goods to customs control, namely, to ensure that customs duty is paid before delivery of those goods into home consumption.[16]
[16] Citing Zappia at [5], [28] (Kiefel CJ, Bell, Gageler and Gordon JJ).
(n)Nettle J, delivering a separate judgment in Zappia, said that the evident object of s 35A is the practical one of motivating persons with the ability de facto to keep dutiable goods safely, to account therefor to the satisfaction of the Collector and to ensure that, if such persons fail to do so, a Collector may recover from them the duty for home consumption payable in respect of the goods.[17]
[17] Citing Zappia at [46] (Nettle J).
(o)The second reading speech supports that interpretation. The provision was seen as an alternative to the provision of security by such a person.[18]
[18] Citing Commonwealth, Parliamentary Debates, House of Representatives, 8 May 1957 (Frederick Osborne); Pearce v Coynes Freight Management Group Pty Ltd (2010) 183 FCR 540; [2010] FCA 320 at [63]–[68]
(p)Sections 35A (and s 60 of the Excise Act) have historically been construed in a broad fashion, notwithstanding that the provisions may sometimes produce what might be thought to be unfair results.[19]
[19] Citing Drew v Dibb (2008) 169 FCR 320; [2008] FCA 1057 at [25] (Finkelstein J).
(q)It is established by authority that the obligation to keep goods safely is essentially absolute.[20] The only qualification is that a person is not required to avoid the unavoidable.
[20] Citing Caltex at [157]; noting “[t]his passage was obiter dicta but is a useful statement of the principle.”
(r)Accordingly, while “fail” in s 35A does not simply mean “does not”, there is almost no scope for a person who does not keep dutiable goods safely to have not “fail[ed]” to keep them safely in the relevant sense.[21]
[21] Citing cf. Applicant’s Statement of Facts, Issues and Contentions dated 25 September 2020 at [52].
(s)In the present matter, there is no suggestion that the alcoholic beverages were delivered into home consumption due to an unavoidable occurrence. Consequently, the delivery of them into home consumption without the payment of duty constitutes a “fail[ure]” under s 35A.[22]
[22] Citing cf. Applicant’s Statement of Facts, Issues and Contentions dated 25 September 2020 at [47]–[48].
(t)However, LTA was permitted to deliver alcoholic beverages into home consumption without the payment of duty pursuant to its PSP. Accordingly, the question that arises is whether there can be a “fail[ure]” by reason of the duty not being paid by the time specified in the PSP.
(u)The permission under s 69(5) was subject to conditions set out in the Act, including that, at the time when each return is given to the Collector, the person pay any duty at the rate applicable when the goods were delivered into home consumption.[23]
[23] Citing the Act s 69(8)(h).
(v)The PSP required LTA to pay customs duty in respect of goods delivered into home consumption in the period of seven days commencing each Monday and concluding at the close of business the following Sunday, by 4:00pm on the next business day following that Sunday.
(w)The Applicant contends that the PSP operates as an express statutory exception to s 35A(1) relying on s 132AA(4), item 1 of the Act, which confirms that s 69(8)(h) (which provides when duty is payable by the holder of a PSP) is an exception to the general rule that duty is payable when goods are entered for home consumption.[24]
[24] Citing the Act s 132AA(1).
(x)Section 35A(1) does not affect the liability of a person arising under or by virtue of any other provision of the Act or a security given under the Act.[25] Further, s 35A(1) does not impose duty; it imposes an amount equal to the duty that would be payable if the goods were entered for home consumption on the day on which the demand was made.[26]
[25] The Act s 35A(4)(a).
[26] The Act s 35A(1); Chief Executive Officer of Customs v Tony Longo Pty Ltd (2001) 52 NSWLR 458; [2001] NSWCA 147 at [99] (Heydon JA, Mason P and Rolfe AJA).
(y)Therefore, liability under s 35A(1) is collateral and not substitutional for the liability to pay duty that may be incurred under other provisions.[27]
[27] Citing Southern Shipping at 288 (Dixon CJ, Windeyer J agreed); Caltex at [147] (Sundberg J); Pearce at [171] (Dodds-Streeton J).
(z)Accordingly, the PSP is not an express statutory exception to s 35A(1) of the Act. The Act does not state that s 35A(1) does not apply when there is a PSP. Nor does s 132AA(4), item 1 of the Act require that operation. Instead, liability under s 35A(1) is collateral to and not substitutional for the liability to pay duty under other provisions, such as s 132AA(1) of the Act. Put another way, s 35A(1) provides an alternate source of liability.
(aa)It would undermine the purpose of s 35A if a person in, or entrusted with, possession, custody or control of dutiable goods could allow them to be delivered into home consumption and, when duty is not paid, escape liability on the basis that the goods had already been delivered into home consumption when the duty was payable.
(bb)LTA had permission to deliver the alcoholic beverages into home consumption without the prior payment of duty on the condition that it would pay the duty by a specific time afterwards. Because LTA did not comply with that condition, the alcoholic beverages found their way into home consumption by “irregular means”, to adopt the language used by Taylor J in Southern Shipping.[28]
[28] Citing Southern Shipping at 295 (Taylor J).
(cc)Accordingly, the purpose of s 35A supports its application to the present circumstances.
(dd)In Caltex Sundberg J stated that, on its proper construction, s 60 can be relied upon even where the goods have been delivered for home consumption where such delivery is not accompanied by the payment of duty.[29] Section 60 applied where (1) a person has or has had possession of excisable goods; (2) the excisable goods are subject to the Commissioner’s control (i.e. had not been delivered into home consumption); and (3) there is a failure to keep them safely. Importantly, Sundberg J concluded the second requirement is referrable to the time when the person has possession of the excisable goods, not when the failure occurs.[30]
[29] Citing Caltex at [148] (Sundberg J).
[30] Citing Caltex at [155], [157] (Sundberg J).
(ee)It was, accordingly, found, obiter dictum, that Caltex’s delivery into home consumption of the oil without the payment of duty, notwithstanding the permission, was a failure under s 60 of the Excise Act.
(ff)Accordingly, “fail[ing to] keep… goods safely” includes failing to prevent the goods being delivered into home consumption without the payment of duty, irrespective of when the duty was payable.
(gg)“[F]ail[ing] to keep… goods safely” includes a failure to ensure that duty is paid on goods delivered into home consumption. In circumstances where duty has not been paid when goods are delivered into home consumption, the person must have ensured, come what may, that the duty will be paid.
(hh)A related question is whether the dutiable goods must be subject to customs control at the time when there is a failure to keep them safely. The question only arises if the relevant failure occurred when the Applicant was no longer in, or entrusted with, possession, custody or control of the dutiable goods. It is while that person is in, or entrusted with, possession, custody or control of the dutiable goods that they must ensure, come what may, that duty will be paid.
(ii)In the alternative to [17(hh)], the Respondent contends that a person can fail to keep goods safely under s 35A(1)(a) notwithstanding that the dutiable goods are no longer subject to customs control.
(jj)The meaning of “fails to keep those goods safely” in s 35A(1)(a) must be ascertained having regard to its context.[31] That context includes the chapeau in s 35A(1), which required that there be “dutiable goods which are subject to customs control”.
[31] Citing as an example SZTAL at [14] (Kiefel CJ, Nettle and Gordon JJ).
(kk)“Home consumption” means consumption somewhere in Australia.[32] There is a distinction between the delivery of goods into home consumption (used in s 30(1B)(b)) and the entry of goods for home consumption (used in s 35A(1)).[33] The former refers to the time at which goods are physically released into home consumption,[34] whereas the latter refers to the time at which liability to pay duty crystallises.[35]
[32] Citing Moama Refinery Ltd v Chief Executive Officer of Customs (2001) 115 FCR 205; [2001] FCA 1287 at [20] (Ryan J).
[33] Citing the Act ss 69(1), 69(5), 99(2), 132AA(4) item 1.
[34] Citing the Act ss 30(1)(a)(vi), 30(1B)(b), 69(1), 69(5), 99(2).
[35] Citing the Act ss 68(3A), 132(1), 132AA(1) item 1; citing also Drew at [3] (Finkelstein J).
(ll)The chapeau in s 35A(1) is followed by two alternatives: (a) “fails to keep those goods safely”; or (b) “when so requested by a Collector, does not account for those goods to the satisfaction of a Collector in accordance with section 37”. In this matter, the Respondent only relies upon the first alternative. If either alternative is present, the Collector may issue a demand in writing to the person.
(mm)For two reasons, the Respondent submits there can be a “fail[ure] to keep… goods safely” even if the goods are no longer “subject to customs control”.
(i)First, a failure to keep goods safely includes a failure to pay duty on goods delivered into home consumption, irrespective of when that duty was payable. Such a failure occurs after the goods are delivered into home consumption (i.e. after the person ceases to have, or be entrusted with, possession, custody or control of the dutiable goods).
(ii)Second, the context of s 35A(1)(a) is inconsistent with such a timing requirement. Instead, a harmonious reading of s 35A(1) requires that there is no such timing requirement. The only timing requirement is that the Applicant had possession, custody or control of the dutiable goods at a time when they were subject to customs control. The obligation to ensure the goods do not find their way into home consumption without the payment of duty was placed upon the Applicant at that time.
(nn)It would render s 35A(1)(b) virtually meaningless if a Collector had no power to request an account when the person no longer has, or is no longer entrusted with, possession, custody or control of the dutiable goods. Instead, the provision must be read as empowering the Collector to request an account even though the person no longer has, or is no longer entrusted with, possession, custody or control of the dutiable goods.
(oo)A harmonious reading of s 35A(1) requires consistency as to the two alternatives. Because an account under s 35A(1)(b) can be requested after the person no longer has, or is no longer entrusted with, possession, custody or control of the dutiable goods, it follows that a failure to keep goods safely can occur even though the person no longer has, or is no longer entrusted with, possession, custody or control of the dutiable goods. Consequently, a harmonious reading of s 35A(1) requires that there is no timing requirement.
(pp)Alternatively, dutiable goods delivered into home consumption pursuant to a PSP continue to be subject to customs control until duty is paid. Accordingly, any person that had, or had been entrusted with, possession, custody or control of the dutiable goods can be issued a demand under s 35A(1) at any time until the duty is paid.
(qq)Sub-sections 30(1)(a)(vi) and (1B)(b) of the Act provide to the effect that goods shall be subject to customs control until delivered into home consumption “in accordance with a permission under section 69”. In the present matter, the dutiable goods were not delivered into home consumption “in accordance with a permission under section 69” because LTA did not comply with the condition of the PSP that required the payment of duty.
(rr)After imported goods go into circulation, it becomes almost impossible, from a practical perspective, to trace them.[36] Contrary to the Applicant’s contention, it does not follow from the difficulty in tracing goods after they are delivered into home consumption that customs control necessarily ceases. Instead, that difficulty supports a broad reading of s 35A(1). It is only when goods are delivered into home consumption “in accordance with a permission under section 69” that customs control ceases.
(ss)This construction of s 30(1B)(b) of the Act is supported by the meaning that is ordinarily given to the expression “in accordance with”, being “in conformity with” or “consistently with”.[37] Dutiable goods do not cease to be under customs control merely because a person with a PSP causes them to be delivered into home consumption. Instead, that delivery into home consumption must be in conformity with, or consistent with, the permission. If the person does not comply with the condition on the permission requiring payment of duty, then there has not been a delivery into home consumption in conformity with, or consistent with, the permission.
(tt)Consequently, contrary to the Applicant’s contentions, customs control did not cease merely when the dutiable goods were delivered into home consumption.
[36] Citing R v Lyon (1906) 3 CLR 770 at 784 (O’Connor J); Caltex at [143].
[37] Citing Walker v Wilson (1991) 172 CLR 195 at 208 (Deane, Dawson, Toohey and McHugh JJ); Ramsay v Sunbuild Pty Ltd (2014) 221 FCR 315; [2014] FCA at [95] (Reeves J).
The Applicant

The Applicant provided an outline of submissions on 28 May 2021 (AOS) which was to the following effect:
(a)The key issue emerges from the ROS. There is a temporal gap between the permitted delivery of the subject goods into home consumption and the obligation to pay the duty “by a specified time afterwards”. Under the PSP, LTA had permission to deliver alcoholic beverages into home consumption without prior payment of duty. The duty was payable by a specific time afterwards.
(b)The subsequent failure, by LTA, to pay the duty, does not render the delivery, by LTA, of the goods, “impermissible”. The subsequent temporally distinct failure, by LTA, to pay the duty, is a breach, by LTA, of a condition of the PSP. LTA remains liable to pay.
(c)The delivery of the subject goods, by LTA, into home consumption, is not alleged to be an unlawful act or failure, nor is it. That act and fact of delivery of the goods into home consumption is “in accordance with a permission under section 69 …”.
(d)The failure subsequently, by LTA, to pay duty, cannot retrospectively render unlawful the prior lawful act and fact of delivery of the goods. The goods didn’t find their way into home consumption by “irregular means”.
(e)The present Applications are made by a separate distinct legal person, with separate and distinct, if concurrent, obligations under the Act. The present case requires consideration of how the acts and omissions of LTA, in the context of its breaches of conditions of its PSP, translate into the Respondent’s Decisions with respect to the Applicant.
(f)Caltex has useful application to the present case, but the key “timing” issue was not considered at all. Whilst Caltex involved a PSP, the Court was not required to consider the temporal disjunction between “delivery into home consumption” and the obligation to pay the duty.
(g)A critical distinguishing factor between Caltex and the present is that Caltex had failed to report the delivery into home consumption of the subject excisable goods, whereas in the present case LTA had so reported. Caltex mistakenly took the view that its use of the residual fuel by-product did not amount to the relevant “delivery into home consumption”.
(h)The obiter reasoning in Caltex relates to the characterisation of Caltex’s consumption of its own by-product as constituting the relevant act or event of “delivery” into “home consumption”.
(i)Sundberg J clearly expresses the view that the subject goods were delivered into home consumption pursuant to its “PSP equivalent” permissions, despite the subsequent non-payment of duty. Caltex’s subsequent non-payment of duty did not detract from the characterisation of the event of delivery into home consumption as being made pursuant to its Excise Act s 61C permissions.
(j)In the present case, LTA did report the delivery into home consumption of the subject excisable goods, pursuant to the Import Nature 30 (N30) Declaration that LTA lodged. There is no debate that the goods were delivered into home consumption in the conventional manner contemplated by the PSP.
(k)Caltex does not directly assist in the analysis of the temporal issues. Those issues did not arise for consideration by Sundberg J. Caltex was the owner of the subject goods and Caltex was principally liable to pay any duty in any event. In Caltex there was no “third person”. There was no director of Caltex being pursued under s 35A, unlike the present case. In the present case the holder of the PSP, LTA, is not being pursued at all.
(l)The Applicant’s liability turns solely upon the proper application of s 35A(1)(a) of the Act. The sole allegation is that the Applicant failed to keep goods safely, not that he failed to pay duty, unlike Caltex. That makes sense because it was LTA and not the Applicant, which was liable to pay the duty upon the goods delivered into home consumption pursuant to the PSP and the Act. The Respondent’s submission that a “’fail[ure] to keep… goods safely’ includes delivering goods into home consumption but failing to pay duty” is not applicable because the Applicant neither delivered goods into home consumption, nor failed to pay duty on those goods.
(m)The failure to pay the duty was a failure by LTA only. The Applicant’s sole obligation was, or rather had been, to keep the goods safely.
(n)A person’s obligation, to keep goods safely, is not an absolute obligation.[38] “Fails” in the relevant sense does not mean no more than “does not” keep the goods safely. Section 35A(1)(a) of the Act imposes an obligation which a person must have the capacity to comply with.[39]
[38] Citing Zappia at [35].
[39] Citing Zappia at [36].
(o)As soon as the goods are delivered into home consumption, the Applicant cannot by any linguistic gymnastics be in possession, custody or control of those goods. From that moment, the Applicant no longer has capacity to comply with an obligation to keep the goods safely. That moment is the moment at which the Applicant must be adjudged by reference to his obligation to keep the goods safely. If he has kept the goods safely until that moment, then he has kept the goods safely and he is discharged from that moment forth from any further obligation of that kind.
(p)At that moment, no duty was payable upon the goods. At that moment, when the Applicant parted with possession, custody or control of the goods, those goods did not enter into home consumption “without the payment of duty”, they simply entered into home consumption. At that moment, those goods ceased to be subject to customs control.[40] The goods are “subject to customs control” from the time of their importation until:
[40] Citing the Act ss 30(1)(a)(vi), 30(1B)(b).
the excise-equivalent goods are delivered into home consumption in accordance with an authority to deal or in accordance with a permission under section 69, 70 or 162A…
(See [6] above.)
(q)Once the goods are delivered into home consumption, they are not under “control”. They are in “circulation”. The section expressly refers to the event of “delivery” into home consumption and no reference is made to the event of “payment” of any duty.[41]
[41] Citing Sundberg J in Caltex at [155].
(r)The critical factor for consideration is not whether the goods are subject to customs control, but rather the terms upon which the Applicant parted with possession, custody or control– if that parting was done without a prior failure to keep those goods safely (including any failure to pay duty prior to that parting), then the Applicant has kept those goods safely.
(s)Upon the parting with possession, the capacity to comply with that obligation ceases, or to put the High Court’s view differently, the obligation itself ceases.[42]
[42] Citing Zappia at [36].
(t)The delivery of the goods into home consumption is both the time at which the goods ceased to be subject to customs control and ceased to be within the possession, custody or control of the Applicant. No duty was payable at that time. Accordingly, it cannot be said that the Applicant failed to keep those goods safely. The subsequent failure by LTA to pay the duty which subsequently became due and payable by LTA, was not a failure by the Applicant to keep the goods safely.
(u)If the PSP is not an “express statutory exception” to s 35A(1)(a), it nevertheless informs and influences the factual basis for the operation of s 35A(1)(a). The PSP regime has the effect of changing when import duty must be paid by LTA. That has a consequential effect upon the application of s 35A(1)(a) to the Applicant.
(v)It is not a case of the Applicant “escaping liability, when duty is not paid”– LTA was obliged to pay the duty– the Applicant was obliged to keep the goods safely.
(w)Zappia is distinguishable for the present case. In Zappia customs duty was payable on the subject goods by the time those goods were entered for home consumption while in the present case the PSP meant that duty was not payable at that point.
(x)A PSP expressly contemplates, in fact authorises, the delivery of goods into home consumption and thereby their release from customs control, before any duty is paid.
(y)Section 35A cannot be read as if the statutory PSP regime under s 69 of the Act did not exist. It does exist and its existence informs the meaning and application of other provisions of the Act.
(z)Zappia is further distinguishable. At [8] the Court refers to the warehouse licence being subject to conditions, one of which was that “the holder ‘must not permit warehoused goods to be delivered for home consumption’ unless the goods ‘have been entered for home consumption’ and ‘an authority to deal with them is in force”. At [28] the Court also held:
The description in s 35A(1) of the Act of “a person who has, or has been entrusted with, the possession, custody or control of dutiable goods which are subject to customs control” must be read in light of the statutory purpose of subjecting dutiable goods to customs control, namely, to ensure that customs duty is paid before delivery of those goods into home consumption. …
(aa)Under a PSP that is simply not the case. The PSP expressly contemplates, permits and authorises the delivery of goods for home consumption without entry for home consumption.[43] There was no PSP or equivalent in Zappia.
[43] Citing R1, T48/966.
(bb)It is incontrovertible that goods cease to be subject to customs control under s 30 of the Act at the time at which those goods are delivered into home consumption.[44]
(cc)Once that is accepted, it follows that the Applicant, from that time, does not have the degree of power or authority in relation to the dutiable goods which is sufficient to enable that person to meet the affirmative content of the obligation in s 35A(1)(a), within the meaning used by the High Court plurality at [31] of Zappia.
(dd)Similarly, the same factual distinction arises in Southern Shipping. At [33] of Zappia, referring to Southern Shipping, the Court observed:
There a manufacturer had delivered, to a shipping company, excisable tobacco products which had not been entered for home consumption and which therefore remained “subject to the control of the Customs”
(ee)Like Zappia, Southern Shipping considered the effect of materially identical legislative provision, in relation to dutiable goods which had not been entered for home consumption and which therefore remained “subject to the control of customs”.
(ff)In the Applicant’s case, the alleged “failure” occurred when the subject goods were not subject to customs control. The subsequent failure by LTA to pay the duty cannot by any stretch of the meaning of the legislative words amount to a failure by the Applicant to keep the goods safely.
(gg)The Applicant’s obligation to keep the goods safely was fulfilled if the goods were delivered into home consumption as contemplated, permitted and authorised by the PSP. The goods were, at that point, no longer subject to customs control.
(hh)It is not the Applicant’s obligation under section 35A of the Act to subsequently ensure or guarantee that the owner of the goods (LTA) pays the duty payable upon them.
[44] Citing ss 30(1)(a)(vi) and 30(1B)(b) of the Act.
CONSIDERATION
The Applicant lodged four applications for review. At para 3 of his RASFIC, the Respondent advised that “[t]he decision to issue Demand 3 ($505,374.41) (T70) is sought to be withdrawn by the Respondent” (original emphasis). By para 72.3 of the RASFIC, the Respondent proposed that the appropriate order in respect of that demand would be that, pursuant to s 26 of the AAT Act, with the consent of the Tribunal and the Applicant, the decision of the Respondent dated 13 December 2017 to demand payment from the Applicant of the amount of $505,374.41 pursuant to s 35A of the Act be set aside. That demand is the subject of application 2017/7568. For reasons that I give later, the order proposed by the Respondent is not appropriate and, in any event, is not a decision that is within the Tribunal’s power. For the purposes of these reasons for decision, it is sufficient to note for the time being that I have not reviewed the substance of that demand.
The parties have refined the matters in dispute to a single issue, namely issue 2 in [13] above: did the Applicant fail to keep safely the dutiable goods that are the subject of the s 35A demands made to the Applicant? I commend the parties for being able to distil their difference to a single issue, and I am grateful for their having agreed a statement of facts. I also agree that the single issue that they have identified is determinative of the three live applications.
The following agreed facts give context to the issue and the parties’ respective contentions:
(a)At all material times LTA held a customs warehouse licence under s 79 of the Act. That licence was cancelled on 7 March 2018.
(b)From 10 July 2010 to 5 October 2017, LTA held a PSP issued pursuant to s 69 of the Act. The PSP granted permission to LTA to deliver into home consumption alcoholic beverages from the LTA bond warehouse, without entering them for home consumption, on conditions including:
(i)LTA must pay customs duty due and payable in respect of goods delivered into home consumption in a period of seven days;
(ii)LTA must complete and electronically lodge a N30 declaration in respect of the goods delivered into home consumption during the period referred to above in sub-para (i); and
(iii)LTA must pay the customs duty.
(c)At all relevant times the Applicant:
(i)was the sole director and secretary of LTA;
(ii)was notified to the relevant authorities in accordance with the Warehouse Licence as an individual who would participate in the management and/or control of LTA;
(iii)was notified to the relevant authorities as being an authorised contact in respect of the LTA bond;
(iv)was the manager and one of the staff of the LTA bond; and
(v)had sole control of and responsibility for the management of LTA’s business, including stock control and movement; compliance with importation and storage requirements and the lodgement of declarations; and oversight of financial matters such as payments to creditors and cash flow.
(d)The relevant alcoholic beverages were “dutiable goods”, “excise-equivalent goods” and not “examinable food”, as those expressions are used in the Act.
(e)Customs duty and goods and services tax were payable on the relevant alcoholic beverages.
(f)At all relevant times, the general practice of LTA in relation to imported alcoholic beverages was as follows:
(i)LTA purchased, and imported into Australia, alcoholic beverages from overseas suppliers and manufacturers. The alcoholic beverages were unshipped at the Port of Fremantle, Western Australia;
(ii)at that point, the alcoholic beverages were entered for warehousing by a customs broker engaged to act on behalf of LTA;
(iii)the alcoholic beverages were then transported by truck from the Port of Fremantle to the bond warehouse.;
(iv)from time to time, alcoholic beverages were removed by LTA from the bond warehouse. At this point, a truck driver would complete a “removal of stock form” that recorded the quantity and type of each alcoholic beverage removed;
(v)alcoholic beverages removed from the bond warehouse would be delivered by truck to LTA’s warehouse in Wembley (LTA warehouse);
(vi)an employee of LTA collated the removal of stock forms into weekly settlement statements which were forwarded to LTA’s customs broker who then produced N30 declarations by which the alcoholic beverages were entered for home consumption under s 68(3A) of the Act and the PSP; and
(vii)the customs broker would lodge the N30 declaration with Customs. Upon lodgement, Customs would direct debit from LTA’s nominated account a sum of money on account of duty, GST and wine equalisation tax payable on the alcoholic beverages.
Demand/Debt 1 (AAT application 2017/7566)
(g)During the period from November 2015 to September 2016, 55 N30 declarations were lodged with Customs by or on behalf of LTA. These N30 declarations stated and it is the fact that:
(i)LTA delivered into home consumption certain alcoholic beverages in the period from November 2015 to September 2016 (First Beverages);
(ii)LTA was the owner of the First Beverages; and
(iii)customs duty was payable on the First Beverages.
(h)Even though each N30 declaration was lodged, the customs duty was not paid.
(i)From importation until they were removed from the bond warehouse (at least), the Applicant had possession, custody or control, or was entrusted with possession, custody or control of the First Beverages. LTA and the Applicant no longer have possession, custody or control of the First Beverages.
(j)On 12 October 2016, the Australian Taxation Office (ATO) issued a demand pursuant to s 165 of the Act to LTA for payment of the shortfall amount of customs duty on the First Beverages, being $1,090,499.27 (Debt 1).[45]
[45] T10.
(k)Between 6 February 2017 and 13 April 2018 part payments of Debt 1 totalling $398,405.39 were made by LTA.
(l)On 13 December 2017, the ATO issued a statutory demand to the Applicant (Demand 1) for the amount of $1,090,499.27.[46] The demand was for payment by 17 January 2018.
[46] T72.
(m)If the First Beverages were entered for home consumption on 13 December 2017, the amount of $1,013,171.30 in customs duty would have been payable (after taking into account the credit referred to in paragraph (n) below).
(n)Since Demand 1 was issued, the Respondent has accepted that Debt 1 should be reduced by $77,327.97 for duplication and other errors.
(o)On 23 September 2018, the ATO received $88,499.34 under the Deed of Company Arrangement executed by LTA.
Demand/Debt 2 (AAT application 2017/7050)
(p)In April 2017, three N30 declarations were lodged with Customs by or on behalf of LTA. These N30 declarations stated and it is the fact that:
(i)LTA delivered into home consumption certain alcoholic beverages in the period from November 2016 to January 2017 (Second Beverages);
(ii)LTA was the owner of the Second Beverages; and
(iii)customs duty in the amount of $83,027.54 was payable on the Second Beverages.
(q)Even though each N30 declaration was lodged, the customs duty was not paid.
(r)From importation until they were removed from the bond warehouse (at least), the Applicant had possession, custody or control, or was entrusted with possession, custody or control of the Second Beverages. LTA and the Applicant no longer have possession, custody or control of the Second Beverages.
(s)On 16 May 2017, the ATO issued a demand pursuant to s 35A of the Act to LTA for payment of the customs duty on the Second Beverages in the amount of $83,027.54 (Debt 2).
(t)On 3 November 2017, the ATO issued a statutory demand to the Applicant for the amount of $83,027.54 (Demand 2).[47] If the Second Beverages were entered for home consumption on 3 November 2017, the amount of $83,027.54 would have been payable in customs duty. The demand was for payment by 1 December 2017.
[47] T67.
Demand/Debt 4 (AAT application 2017/7569)
(u)During the period from September 2016 to August 2017, 37 N30 declarations were lodged with Customs by or on behalf of LTA. These N30 declarations stated and it is the fact that:
(i)LTA delivered into home consumption certain alcoholic beverages in the period from September 2016 to August 2017 (Fourth Beverages);
(ii)LTA was the owner of the Fourth Beverages; and
(iii)customs duty in the amount of $690,481.38 was payable on the Fourth Beverages.
(v)Even though each N30 declaration was lodged, the customs duty was not paid.
(w)From importation until they were removed from the bond warehouse (at least), the Applicant had possession, custody or control, or was entrusted with possession, custody or control of the Fourth Beverages. LTA and the Applicant no longer have possession, custody or control of the Fourth Beverages.
(x)On 1 September 2017, the ATO issued a demand pursuant to s 165 of the Act to LTA for $690,481.38 (Debt 4).
(y)On 13 December 2017 the ATO issued a statutory demand to the Applicant for the amount of $690,481.38 (Demand 4).[48] If the Fourth Beverages were entered for home consumption on 13 December 2017, the amount of $690,481.38 would have been payable in customs duty. The demand was for payment by 10 January 2018.
(z)By reason of the payments received, and the credits that the Respondent accepts ought to be made for duplication and other errors, the amounts now claimed by the Respondent are:
(i)Demand 1 – $526,266.57;
(ii)Demand 2 - $83,207.00; and
(iii)Demand 4 - $690,481.38.
[48] T71.

The Respondent relies solely on the contention that the Applicant failed to keep the dutiable goods safely as giving rise to a liability on the part of the Applicant under s 35A(1) of the Act. The Respondent contends that “a ‘fail[ure] to keep… goods safely’ includes delivering goods into home consumption but failing to pay duty on those goods, irrespective of when the duty was payable”.[49]
[49] ROS para 5.2.
The Respondent argues that it is not necessary for the dutiable goods to have been subject to customs control when the failure occurred. In the alternative, the Respondent argues that the goods continued to be subject to customs control at the time that they were delivered into home consumption. The Respondent contends that the decision in Caltex supports those contentions.
As set out at [17] above, the Respondent contends that the purpose of s 35A of the Act is the protection of revenue and that that purpose is best achieved by adopting the interpretation of the Act posited by the Respondent. The Respondent cites the judgments in Zappia and Southern Shipping as well as Caltex as supporting the Respondent’s interpretation.
The Applicant argues that the dutiable goods were delivered into home consumption in accordance with the PSP. Duty on those goods was not payable at that time and a subsequent failure by LTA to pay the duty does not render the delivery of the goods in accordance with the PSP irregular, nor does it amount to a failure by the Applicant to keep the goods safely.
Applying the ordinary meaning of “fails to keep the goods safely”[50] it is hard to see how the removal of the alcoholic beverages as described in [21(f)] above, where removal was permitted under the PSP without prior or contemporaneous payment of duty, could be a failure to keep goods safely. That, in my view, is at the core of the Applicant’s argument. The Respondent concedes that at the time that the goods were removed from the bond warehouse, and thereby delivered into home consumption, no duty was payable because of the provisions of the PSP. In those circumstances the Respondent then correctly observes that “the question that arises is whether there can be a ‘fail[ure]’ by reason of the duty not being paid by the time specified in the PSP”.[51]
[50] The Act s 35A(1)(a).
[51] ROS para 18.
The first point that the Respondent makes is that the PSP is not an exception to s 35A(1) of the Act. The Act does not say that s 35A(1) does not apply if there is a PSP. Liability under s 35A(1) is collateral to, and not substitutional for, the liability to pay duty under other provisions of the Act. I agree with that proposition.[52]
[52] Southern Shipping at 288; Caltex at [147]; Pearce at [171].
The Respondent then argues that it would undermine the purpose of s 35A if a person in, or entrusted with, possession, custody or control of dutiable goods, could allow them to be delivered into home consumption and, when duty is not paid, escape liability on the basis that the goods had already been delivered into home consumption when the duty became payable.
The Respondent points to Caltex as supporting the above contention. In that case Caltex had permission under s 61C of the Excise Act to deliver oil into home consumption on the condition that the excise duty was paid by a specified time afterwards.[53] According to the Respondent, Sundberg J stated that, on its proper construction, s 60 of the Excise Act (which is in materially similar terms to s 35A(1) of the Act) can be relied upon even where the goods have been delivered for home consumption where such delivery is not accompanied by the payment of duty.[54] The Respondent contends that “Accordingly, it was held that Caltex’s delivery into home consumption of the oil without the payment of duty, notwithstanding the permission, was a failure under s 60 of the Excise Act”.[55]
[53] Caltex at [57].
[54] Citing Caltex at [148].
[55] ROS para 31.
As the Respondent notes, the comments of Sundberg J relied on by the Respondent were obiter dicta.[56] His Honour’s primary, and determinative, finding was that the goods in question were not dutiable.[57]
[56] ROS para 32.
[57] Caltex at [93], [96] and [97].
It is important to consider [148] of Caltex in that context and in light of the preceding paragraphs.
145For these reasons, I consider that Caltex delivered the residual oils for home consumption pursuant to its s 61C permissions. Accordingly, if I am wrong on the "refined" point, then Caltex was obliged to account for the residual oils in its weekly returns and is liable to pay the requisite duty on them.
146One further argument in respect of the "delivery" point was advanced by Caltex. It submitted that the Commissioner had effectively conceded that the residual oils had not been "delivered" because the Commissioner requested from it an accounting for the goods pursuant to s 60 of the Excise Act. As Caltex put it, since s 60 applies only to goods "which are subject to [the Commissioner’s] control" – which control ceases upon delivery for home consumption – then the Commissioner’s request was an acknowledgment that the residual oils were still subject to its control and had not therefore been delivered.
147This however is to misconstrue the section and its intended operation. Liability under s 60 is "collateral and not substitutional" for the liability to pay excise duty that may be incurred under other provisions of the Excise Act: see Southern Shipping 107 CLR at 288 (Dixon CJ); see also s 60(4) of the Excise Act. Section 60 is an alternative recovery mechanism open to the Commissioner in appropriate cases where the circumstances set out therein are met. Subject to what I say below (at [158]-[162]), it was open to the Commissioner to rely on s 60 in making the request, regardless of whether he also maintained an alternative position that Caltex was liable for excise duty having delivered the residual oils for home consumption.
148While I was not taken to the parties’ correspondence on this point in detail, I note that the Commissioner both prior to (in its Advice) and after making the request (in its objection decision) maintained a claim that Caltex had delivered the residual oils for home consumption for the purposes of s 61C. In those circumstances, I do not consider that the request amounted to any form of concession that the Commissioner accepted that the residual oils had not been delivered. In any event, a proper construction of s 60 in my view would permit the Commissioner to rely on s 60 even where the relevant excisable goods have been "delivered for home consumption", where such delivery is not accompanied by the payment of duty. For reasons I shall explain below in dealing with the s 60 point, I consider that s 60 is capable of application to excisable goods that (1) have been subject to the Commissioner’s control but (2) have not been kept safely by virtue of their delivery into home consumption without the payment of duty.
As set out in the above passage, Sundberg J found at [147] that “[s]ection 60 is an alternative recovery mechanism open to the Commissioner in appropriate cases where the circumstances set out therein are met” (emphasis added.) Relevantly, s 60 of the Excise Act provided:
(1)Where a person (including a licensed manufacturer) who has, or has been entrusted with, the possession, custody or control of excisable goods which are subject to the [Commissioner’s] control:
(a) fails to keep those goods safely; or
(b) when so requested by [the Commissioner], does not account for those goods to the satisfaction of [the Commissioner];
the person shall, on demand in writing made by [the Commissioner], pay to the Commonwealth an amount equal to the amount of the Excise duty which would have been payable on those goods if they had been entered for home consumption on the day on which [the Commissioner] made the demand.
The terms of s 60(1) of the Excise Act were, materially, to the same effect as s 35A(1) of the Act.
What then were the circumstances that Sundberg J considered met the requirements for the operation of s 60 of the Excise Act? At [155] his Honour found:
155It is clear that the Commissioner’s control over excisable goods ceases upon the goods being delivered for home consumption (see s 61). In this case the residual oils were subject to control from the time of their manufacture or production up until they were delivered for home consumption. If I am correct in finding that they were delivered, then the Commissioner’s control ceased at the time they were delivered (i.e. when dedicated as refinery fuel oil). However it is not correct to say that s 60 has no application in respect of goods over which the Commissioner’s control has come to an end. The section applies where (1) a person has or has had possession of excisable goods; (2) the goods are subject to the Commissioner’s control (ie have not been delivered); and (3) there is a failure to keep them safely or a failure to account for them. It seems to me that the requirement (2) for the goods to be subject to control is concerned with and referable to the period during which they are in the possession of the relevant person rather than the time at which the Commissioner relies on the section. The very thing the section is concerned with is the loss of goods (for example, their disappearance without adequate explanation) or the movement of goods into home consumption while subject to control and without the payment of duty. Section 60 it seems to me has no less an application to excisable goods that have ceased to be subject to control, where the cessation of that control is a result of the manufacturer delivering the goods into home consumption in an unauthorised manner.
And at [157] his Honour found:
157In relation to the failure to keep safely point at (c), the Commissioner relied on the decision of Finkelstein J in Sidebottom 98 FCR 579 and his Honour’s discussion of the purposes of s 60 as explained by the High Court in Southern Shipping 107 CLR 279. What is clear from each of those cases is that s 60 imposes an essentially absolute duty to keep goods safely and to ensure they do not find their way into home consumption without the payment of duty. Where that does occur, the goods will have found their way into home consumption "irregularly", that is, in a manner not authorised by the Excise Act, and s 60 will apply in order that the revenue might be protected. The Commissioner said that the residual oils found their way into home consumption irregularly when Caltex consumed them without duty having been paid. I agree. As I said earlier, Caltex ’s consumption of the residual oils at its refineries amounted to "home consumption". It follows that Caltex ’s dedication of the residual oils as refinery fuel oil, without paying excise duty, and subsequent consumption of them by burning them, means that they found their way into home consumption irregularly. Caltex’s consumption of the residual oils in this manner (by burning and thus using them up or "destroying" them) was therefore a failure to keep them safely within s 60(1)(a). As Dixon CJ said in Southern Shipping 107 CLR at 287, the safe keeping comprehended by s 60(1)(a) is the keeping safe from loss or destruction, because "the provision is pointed at the loss of goods involving the loss of excise duty". Caltex relied on the judgments of Taylor J (at 296) and Menzies J (at 299) in Southern Shipping 107 CLR 279 and their Honours’ references to damage or destruction. However, their observations were directed not to a case such as the present (where the "destruction" is the consumption of the residual oils as a fuel) but to a rejection of the proposition that the section imposes a duty of care not to permit goods to be damaged or destroyed.
His Honour went on to discuss the operation and applicability of s 60(1)(b) of the Excise Act (see [32] above) to a situation where what had happened to the goods in question, in the case of Caltex, oil, was known (i.e. burned or dedicated to consumption in the refinery) and found that, in those circumstances, the Commissioner was not entitled to make a request for an account to be given for those goods under s 60(1)(b) of the Excise Act.[58] He found, however, at [166] that “in [his] view the demand was valid to the extent that it relied on s 60(1)(a) as a basis for Caltex’s liability”. In other words, the burning or dedication of the oil to consumption in the refinery was a failure to keep the goods safely. That was so notwithstanding that duty was not payable on the goods at that time by reason of the permission under s 61C of the Excise Act.
[58] Caltex at [164].
Having stated that s 60(1)(a) would be applicable (bearing in mind that his Honour had dispositively found that the oil was not dutiable), his Honour does not explicitly identify the action or failure to act on the part of Caltex which would have constituted a failure to keep the goods safely for that subsection to be enlivened. The cases to which his Honour referred may assist in identifying the circumstances which his Honour took as being a failure to keep the goods safely. At [147] Sundberg J, citing Southern Shipping, described the proper construction and operation of s 60(1) of the Excise Act as providing “an alternative recovery mechanism open to the Commissioner in appropriate cases where the circumstances set out therein are met” (see [32] above).
In Southern Shipping, the High Court considered liability under the Excise Act in relation to the theft of a quantity of tobacco. At the time of the theft, the tobacco was subject to the control of the Commissioner within the meaning of the Excise Act. Pending the shipment of the tobacco, it had been placed in a store under the control of the defendant. The store was broken into and forty cartons of tobacco were stolen. The Collector maintained that at the time of the theft, the defendant was in possession, custody or control of the excisable goods and demanded payment by the defendant of the duty equivalent under s 60(1) of the Excise Act. In describing the purpose and operation of s 60(1) of the Excise Act in Southern Shipping, Dixon CJ at 288–289 stated that:
It must be remembered that the conditions described by s. 60(1) involved factors which go to the safe keeping and to possession, custody and control, and perhaps the movement of goods from the manufacturer.
McTiernan J in Southern Shipping at 291, in commenting on the operation of s 60(1)(a) of the Excise Act, said:
"Fails" is a word with various meanings. I think that in s. 60 its appropriate meaning is that the person concerned is to be liable if he comes short of keeping the goods safely, that is preserving them from loss or damage. The word "fails" in my opinion is not strong enough to impose upon the person concerned so onerous a duty as that of avoiding the unavoidable. The plaintiff's contention would mean that it does. Lex non cogit ad impossibilia. Paragraph (a) should be read subject only to that presumption. The facts here do not show that the goods were lost because of any event which in my view of the construction of par. (a) takes the defendant outside the operation of the words.
Taylor J at 296 of Southern Shipping described the operation of s 60(1)(a) as follows:
In these circumstances it is I think proper to conclude that the obligation placed upon the carrier by s. 60 (1) is at least analogous to that initially resting upon the manufacturer. That is to say, that whilst he is in possession of the goods it is his responsibility alone to ensure that the goods do not irregularly find their way into home consumption. It is in this sense that he is bound to keep the goods safely and to account for them. That being so he may escape liability if he is still in possession of the goods or if he can account for them by showing that they did not pass into home consumption from his hands. That he may do by showing that he has parted with possession of them in some authorized manner or, I should think, by showing that the goods whilst in his possession have been destroyed. The agreed facts clearly show a failure on the part of the defendant to keep the goods safely in this sense and, that being so, the only other question which remains for consideration is that which arises upon s. 55 of the Constitution.
(Emphasis added.)
While Taylor J was, as he says, making the above statement in the context of the agreed facts “clearly show[ing] a failure on the part of the defendant to keep the goods safely” because the defendant had allowed the goods to be stolen, his Honour does speak in terms of the defendant being under an obligation to ensure that the goods do not irregularly find their way into home consumption. His Honour concludes that if that occurs, there would be a failure to keep the goods safely.
Menzies J at 299 of Southern Shipping found:
Comparing the existing provision with those which it replaced, it is to be observed that the former liability of the manufacturer to give particular security has disappeared and the obligation to pay to the Commonwealth falls in either of the cases mentioned upon the person who either has, or has been, entrusted with the possession, custody or control of the goods. In this setting it is hardly likely that the words "keep . . . safely" refer to protecting the goods from damage or destruction or anything of that nature; for the safety with which the section is concerned is that the goods—subject as they are to the control of Customs—do not get out of Customs control into home consumption without the payment of duty; similarly, the account of the goods that is required is an account which shows an authorized relinquishment of possession, custody and control or, despite an unauthorized loss of possession, custody and control, that the goods have not got into home consumption without the payment of duty or that, notwithstanding the failure to keep the goods safely, Customs control over them is still effective.
It is in the context of the factual background of the goods in question being stolen while in the care of the defendant that the members of the High Court made the statements in Southern Shipping to which Sundberg J refers at [147] in the above quoted passages in Caltex. At [157] his Sundberg J also refers to the decision of Finkelstein J in Sidebottom v Giuliano[59] (see [35] above).
[59] (2000) 98 FCR 579; [2000] FCA 607.
Sidebottom involved a request by the Collector of Customs under s 60(1)(b) of the Excise Act for the defendant to account for petroleum products which, allegedly, had been blended with other products and delivered into home consumption without payment of excise duty. The facts upon which Finkelstein J proceeded are set out at [5] of his judgment as follows:
The third applicant, Australian Petroleum Supplies Pty Ltd (APS), is a distributor of petroleum products from the depot in Saxton Street, Numurkah, a property that is owned by the fifth applicant, RPM Commodities Pty Ltd (RPM). Between 1 July 1996 and 1 August 1997 petroleum products were delivered to the depot by the fourth respondent, GV Liquid Tankers Pty Ltd (GV Liquid Tankers). Those products were blended to create blended petroleum products which are excisable under the Excise Act. The first applicant and the second applicant, directors of each of APS, RPM and GV Liquid Tankers, were said to have initiated, directed and conducted the blending of petroleum products. Excisable blended petroleum products were sold as diesel fuel and removed from the depot without being entered for home consumption and without excise being paid. The amount of excise not paid totals $6,390,000.
The issue for determination by the Court was whether, in the circumstances, it was, permissible for the Collector of Customs to request an account under s 60(1)(b) of the Excise Act. The relevant circumstances (as found) were that, while the Collector may have had a suspicion that the goods in question had not been kept safely, there was no conclusive evidence that that was the case and, further, it was not clear that an accounting would be futile. On the basis of those findings, Finkelstein J found that the Collector did have the power to request an accounting under s 60(1)(b). Finkelstein J extensively cited passages from the judgments in Southern Shipping (some of which I have cited above) and concluded that:
14The object of s 60 is to impose an obligation upon a person in possession, custody or control of excisable goods to ensure that those goods do not find their way into home consumption without the payment of duty. First, the custodian of excisable goods is required to keep them safe, and if he fails to do so then he is liable to pay an amount equal to the excise duty (par 60(1)(a)). Second, the Collector is authorised to request an accounting to discover whether or not there has been a breach of that obligation (par 60(1)(b)). If the "undoubted fact" is that a person in possession, custody or control of excisable goods has failed to keep them safely no purpose would be served by an accounting. The Collector can immediately rely upon par (a) and has no need to resort to par (b) for the purpose of making a demand for an amount equal to the unpaid duty. In that circumstance, in my opinion, par (b) cannot be invoked, and the subsection should be read down to that extent. In my view, par (b) can be relied upon when there is doubt about the whereabouts of excisable goods, or doubt as regards whether they have been kept safely. In those cases it is for the person in possession, custody or control to satisfy the Collector that the goods have not gone into home consumption without payment of duty. His failure to do so will render him liable to pay the debt due to the Commonwealth.
15What are the facts here? Is it the "undoubted fact" that, assuming the applicants had possession, custody or control of blended petroleum products as has been alleged, they failed to keep those goods safely?
16The Australian Government Solicitor who acts for the respondents has made a concession. He says that Mr Giuliano "had, at the time of making the requests to account, information in his possession, custody or power from which he could determine that the goods the subject of the requests had not been safely kept within the meaning of subsection 60(1)(a) of the Excise Act." This points strongly against the authority of Mr Giuliano to request the applicants to account. But the concession does not, in my opinion, go far enough. In particular, it does not amount to an acknowledgment that the "undisputed fact" is that each applicant had failed to keep safely the alleged excisable goods. First, I note that no particular applicant is referred to in the concession. Secondly, the fact that Mr Giuliano has evidence which might lead him to form the opinion that excisable goods were not kept safely, does not mean that his opinion can be elevated to an "undoubted fact". Indeed, I note that in the excise prosecution it is not conceded by the applicants, indeed it is denied by them, that they had possession of excisable blended petroleum products, and that those products were removed from the depot at Numurkah and entered into home consumption without the payment of excise duty.

In finding that it was permissible for the Collector to seek an accounting under s 60(1)(b), Finkelstein J found that the “undoubted fact”, namely that the applicants had failed to keep those goods safely, had not been established and that, accordingly, s 60(1)(a) did not apply. In other words, notwithstanding that it was known that the goods had been blended with other product and delivered into home consumption without duty being paid, that did not amount to a failure by the relevant applicants to keep the goods safely for the purposes of s 60(1)(a) of the Excise Act. However, the basis upon which his Honour so found was not that the goods had been kept safely, but rather that it was not an “undoubted fact” that the applicants had possession of the excisable blended petroleum products. His Honour’s reasoning in fact appears to proceed on the basis that, in the circumstances set out in [45] above, the goods had not been kept safely, but he was not satisfied that that failure could be attributed to the applicants because it was not conceded by the applicants, indeed it was denied by them, that they had possession of excisable goods.
Sundberg J in Caltex made reference to “the purposes of s 60 as explained by the High Court in Southern Shipping” and observed that, it is clear from Southern Shipping and Sidebottom that “s 60 imposes an essentially absolute duty to keep goods safely and to ensure they do not find their way into home consumption without the payment of duty. Where that does occur, the goods will have found their way into home consumption "irregularly", that is, in a manner not authorised by the Excise Act, and s 60 will apply in order that the revenue might be protected”[60] (emphasis added). That statement is obviously correct in the context of the facts of Southern Shipping where there had been a failure to keep the goods safely because the lax security and procedures adopted by the defendant for the safe keeping of the tobacco had allowed the theft to occur. The starting point of the sequence described by Sundberg J at [157] (as I have highlighted above) which resulted in the defendant being held liable under s 60(1) of the Excise Act, was the failure to keep the goods safely. That sequence reflects the facts of Southern Shipping. The effect of the word “and” in the phrase “keep goods safely and to ensure they do not find their way into home consumption without the payment of duty” (emphasis added), particularly in the context of the principles enunciated in Southern Shipping, is, potentially, ambiguous. Is the word “and” used as a coordinating conjunction indicating a dependent relationship between (1) the keeping of goods safely and (2) the goods finding their way into home consumption without duty being paid? That construction would certainly fit the facts of Southern Shipping. It was because of the defendant’s failure to keep the tobacco safely that it was stolen and, that as a result, no duty was paid or even recoverable (absent liability under s 60(1) of the Excise Act). In other words, the liability under s 60(1) arose because the defendant had failed to keep the tobacco safely and as a result the tobacco was stolen and delivered into home consumption without duty being paid. That construction, however, does not mean that every time dutiable goods are delivered into home consumption without duty being paid there is, ipso facto, a failure to keep the goods safe.
[60] Caltex at [157].
In order for that latter construction to apply, the two parts of the passage would have to be de-linked and the word “and” treated as indicating two separate, potentially unrelated circumstances, the first being the failure to keep goods safely and the second being the delivery of dutiable goods into home consumption without duty being paid. That construction is consistent with Sidebottom and appears to be the construction given to s 60(1)(a) of the Excise Act by Sundberg J in Caltex. The delivery of the oil into home consumption without the payment of duty (even where delivery was permitted by the PSP equivalent and duty was not payable until after delivery) was treated as a failure to keep the goods safely for the purposes of s 60(1)(a) of the Excise Act.
The Applicant submits that Caltex is distinguishable and not directly applicable to the present case for the reasons set out at [18(f)-(l)] above. I do not agree. The Applicant argues (see [18(g)] above that Caltex can be distinguished on the basis that Caltex had failed to report the delivery for home consumption of the subject excisable goods, whereas in the present case LTA had so reported. That, in my view, is not a distinguishing factor. The basis upon which Sundberg J found Caltex to be liable under s 60(1)(a) of the Excise Act had nothing to do with whether Caltex had or had not “entered” or declared the consumption for payment of duty. His Honour found Caltex liable because it had delivered the goods for home consumption (i.e. burnt the oil or dedicated it to consumption in the refinery) and duty was not paid.
The Applicant points out that in Caltex Sundberg J found that Caltex had delivered the goods for home consumption pursuant to the PSP equivalent “despite the subsequent non-payment of duty” and that that subsequent non-payment of duty did not detract from the characterisation of the goods having been delivered pursuant to the PSP equivalent (see [18(i)] above). That may have been the case, however, notwithstanding the fact that it was accepted that the goods had been delivered for home consumption pursuant to the PSP equivalent, Sundberg J still found that, by reason of the delivery of the goods for home consumption and the non-payment of duty (albeit payment was not due for some time after delivery of the goods), the goods had not been kept safely for the purposes of s 60(1)(a) of the Excise Act.
The Applicant says that Caltex “does not assist in an analysis of the temporal issues” (see [18(k)] above) because Caltex was the owner of the subject goods and was principally liable to pay the duty. The Applicant points out that there was no “third party” or director of Caltex being pursued under s 35A. That is not a basis upon which to distinguish Caltex from the present case. Sundberg J in Caltex was looking solely at Caltex’s liability under s 60(1)(a) of the Excise Act (Caltex at [59]). Whether it was liable “directly” for the payment of the duty as the owner was not a matter considered, or considered to be relevant, by the Court. This is likely to be due to the fact that the action was one taken by Caltex to set aside the demand made by the Collector under s 60(1) of the Excise Act.[61]
[61] Caltex at [152].
If the Applicant is seeking to distinguish Caltex from the present case on the basis that Caltex, in addition to being liable under s 60(1) of the Excise Act, was also liable as the owner of the goods on which duty was payable, then that is not a basis on which to distinguish Caltex from the present case. Nor is it a basis to make the principles found by Sundberg J apply in respect of s 60(1), and the meaning “keeping the goods safely”, inapplicable to the present case. In the case of Caltex and in the present case, the PSP (or PSP equivalent) allowed the owner to delay payment of the duty to a time after delivery or entry of the goods for home consumption. Insofar as the Applicant’s reference to the “temporal issues” is a reference to the timing of the obligation to pay duty being after the delivery of the goods into home consumption, or to the goods being subject to customs control at the time of delivery or the time of the failure to pay, the “temporal issues” in the present case are the same as those in Caltex.
The Applicant’s submissions reproduced at [18(k) –(t)] above are understandable if one reads s 35A(1) in isolation and without reference to the cases that have considered its equivalent under the Excise Act. As noted above, cases such as Southern Shipping and Zappia apply s 35A, or its equivalent under the Excise Act, to cases where there was, in the ordinary meaning, a failure to keep goods safely at the time when the goods were in the possession of the relevant person and subject to customs control. In both of those cases liability was found because the relevant persons allowed, or more accurately failed to prevent, the goods under their control being stolen. The Applicant’s submissions, however, ignore the broader meaning that has been given to the phrase “keeps [the] goods safely” in s 35A(1) of the Act and its equivalent under the Excise Act in cases such as Caltex and the cases referred to in Caltex, including the High Court in Southern Shipping and the Federal Court in Sidebottom.
The Applicant says that Zappia is distinguishable because the customs duty was payable on the subject goods by the time those goods were entered for home consumption while in the present case the PSP meant that duty was not payable at that point. That may be the case, however, the primary issue being considered by the Court in Zappia was the meaning of possession, custody or control as that term is used in s 35A(1).[62] With the concessions made by the Applicant on that and related issues (see [14] above), the principles emerging from Zappia became peripheral to this case. Zappia does not address the central issue in this case, namely, the meaning of “fails to keep goods safely”. The issues central to this case emerge from Caltex and the cases referred to in that case, particularly Southern Shipping and Sidebottom. In that regard, the relevant facts in Caltex were the same as the present case, namely the goods were delivered into home consumption at a time when duty was not payable under the PSP. In Caltex that delivery, and the subsequent failure to pay duty, was found to constitute an “irregular” delivery of the goods into home consumption and a failure to keep the goods safely. It is that principle, not any principle arising from Zappia, that is critical in determining this matter.
[62] Zappia at [1] and [41].
While the relevant reasoning in Caltex was obiter dictum, it is still, in my view, persuasive.[63] In the absence of any other case considering the issue of the meaning of failing to keep goods safely with relevant facts so aligned with those in the present case, I am persuaded by the thorough and careful reasoning of Sundberg J in Caltex. His Honour’s reasoning, albeit obiter dictum, was not a “mere passing remark”, but was “a considered judgment on a point fully argued…where, had the facts been otherwise, it would have formed part of the ratio. Such judicial dicta standing in an authority somewhere between a ratio decidendi and an obiter dictum…”[64]
[63] The Tribunal also notes that Caltex was cited with approval in Sogo Duty Free Pty Ltd v Commissioner of Taxation [2010] FCA 976.
[64] Nowicka v Superannuation Complaints Tribunal (2008) 176 FCR 1; [2008] FCAFC 191 at [21]; see also Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 at 150–151 [134].
I have considerable sympathy for the Applicant who, in effect, did nothing wrong and who, on an ordinary or lay understanding of “keeping the goods safely”, did so, yet is liable only because of a third party’s failure (albeit a third party of which he was the sole officer) to pay the duty.
I find that the Applicant did fail to keep the relevant alcoholic beverages safely for the purposes of s 35A(1)(a) of the Act. He is accordingly liable under that section.
As noted at [19] above, the Respondent wishes to withdraw the Demand 3 for the payment of $505,374.41 which is the subject of application 2017/7568. As also noted at [19] above, the order sought by the Respondent is not appropriate. Section 26 of the AAT Act prohibits the decision-maker from altering their decision once an application is made for review, relevantly in this case, unless parties and the Tribunal consent to the alteration. The Tribunal setting aside a decision under review under s 43(1) of the AAT Act is a separate and unrelated process. If, as seems to be the Respondent’s contention, it is appropriate to set Demand 3 aside, then there is no utility in the decision (Demand 3) being altered.
The other difficulty with the order proposed by the Respondent is that the Tribunal does not have the power to merely set aside the decision under review. The relevant power under s 43(1)(c) of the AAT Act is to set aside and make a decision in substitution (sub-s (i)) or to set aside and remit the matter for reconsideration with a recommendation or direction (sub-s (ii)). Merely setting aside the decision (as proposed by the Respondent) is not an option available to the Tribunal.
In the present case it is my view that the appropriate disposition of application 2017/7568 is to set aside the decision under review to issue Demand 3 and to substitute a decision not to issue a demand. I note that the Tribunal’s jurisdiction under s 273GA of the Act is to review the “decision of a Collector …making a demand” not to review the demand itself. Accordingly, although somewhat cumbersome, the decisions that I make as set out below review the decision to issue the demand rather than the demand itself.
As also noted above, since the issue of Demand 1, the parties have agreed on the amount now appropriate for that demand.[65] That agreed amended amount is reflected in the decision in relation to that demand below.
DECISIONS
[65] Statement of agreed facts para 45 (as amended at the hearing).
Application 2017/7566 – Demand 1
The decision of the Collector dated 13 December 2017 to make demand for payment of an amount of $1,090,499.27 is set aside and in substitution for that decision there is a decision to make demand for payment of an amount of $424,712.30.
Application 2017/7050 – Demand 2
The decision of the Collector dated 3 November 2017 to make demand for payment of an amount $83,027.54 is affirmed.
Application 2017/7568 – Demand 3
The decision of the Collector dated 13 December 2017 to make demand for payment of an amount of $505,374.41 is set aside and in substitution for that decision there is a decision not to make a demand.
Application 20177569 – Demand 4
The decision of the Collector dated 13 December 2017 to make demand for payment of an amount of $690,481.38 is affirmed.

I certify that the preceding 65 (sixty-five) paragraphs are a true copy of the reasons for the decision herein of Deputy President Boyle

...[SGD].....................................................................
Associate
Dated: 21 September 2021

Date of hearing: 31 May 2021

Counsel for the Applicant: Mr J Cook

Solicitors for the Applicant: Mendelawitz Morton

Counsel for the Respondent: Mr J Slack-Smith

Solicitors for the Respondent: Australian Government Solicitor

Date of hearing:	31 May 2021
Counsel for the Applicant:	Mr J Cook
Solicitors for the Applicant:	Mendelawitz Morton
Counsel for the Respondent:	Mr J Slack-Smith
Solicitors for the Respondent:	Australian Government Solicitor