Excise Amendment Regulations 2000 (No. 4) 2000 No. 209
EXPLANATORY STATEMENT
STATUTORY RULES 2000 No. 209
Issued by the Authority of the Assistant Treasurer
Excise Act 1901
Excise Amendment Regulations 2000 (No. 4)
Section 164 of the Excise Act 1901 (the Act) provides that the Governor-General may make regulations prescribing matters required to give effect to the Act or for the conduct of any business relating to the Excise.
Section 77J of the Act provides that regulations may specify an excisable blended petroleum product to be an exempt blended petroleum product. Regulation 176 of the Excise Regulations 1925 (the Regulations) prescribes the products that are exempt blended petroleum products for the purposes of section 77J.
The purpose of the Regulations is to amend the Excise Regulations to remove the excise exemption relating to blending excise free methanol with excise paid petroleum products.
Certain blends of petroleum products are exempted from the blending arrangements so that those producing such blends do not require licensing as excise manufacturers or payment of further excise upon production. A blend of methanol and petroleum products is prescribed in Regulation 176(2)(k) as an exempt blend, with ethanol and petroleum products similarly prescribed in Regulation 176(2)G). Such blends of petroleum products are only subject to excise that has already been paid on the petroleum product and not on the whole blend. The nature of the products is such that blends of methanol or ethanol are normally made with gasoline (petrol).
Although the excise system is not directly involved in assuring fuel quality, certain provisions that provide concessional excise treatment can have an effect on the quality of some products. A review of the existing provisions concludes that methanol blends are not appropriate. Methanol is a toxic and corrosive substance and has potentially detrimental effects on engines and air quality.
The amending Regulations:
* exclude methanol (and ethanol) from the products that may be used as octane enhancers under Regulation 176(2)(h). This regulation prescribes that, with certain exceptions, a blend of any clean petroleum product and a product used to enhance its octane rating is an exempt blend;
* impose a volume limit on the products that may be used for the purposes of Regulation 176(2)(h) in order that small scale practices by private parties are not constrained, but large scale excise avoidance cannot be carried out by blending products into fuel under the guise of octane enhancement; and
* remove the excise exemption that was afforded to blends of methanol and any clean petroleum product under Regulation 176(2)(k) by deleting that regulation.
The amendments to Regulation 176(2)(h) will not affect existing ethanol blending in any way, as this practice will continue to be covered by existing Regulation 176(2)(j), which specifically allows ethanol blending.
Details of the Regulations are set out in the Attachment.
The amending Regulations commenced on gazettal.
MM07549A-000727Z
ATTACHMENT
Excise Amendment Regulations 2000 (No. 4)
Regulation 1 provides for these regulations to be named the Excise Amendment Regulations 2000 (No. 4).
Regulation 2 specifies that these regulations commenced on gazettal.
Regulation 3 provides that the Excise Regulations 1925 are amended as set out in Schedule 1 to these regulations.
Schedule 1 - Amendment of the Excise Regulations 1925
Proposed item 1 of Schedule 1 substitutes a new paragraph for existing 176(2)(h) that prescribes ethanol and methanol as products that are excluded from use as octane enhancers, and imposes a volume limit of not more than 10 litres capacity on the products that may be used as octane enhancers.
Proposed item 2 of Schedule 1 amends subregulation 176(2) by deleting paragraph 176(2)(k).
Overview
The Excise Amendment Regulations 2000 (No. 4), issued under the authority of the Assistant Treasurer, were enacted to address a specific issue regarding the blending of excise-free methanol with excise-paid petroleum products, which was previously exempt from excise under the Excise Act 1901. The problem identified was the potential for excise avoidance through blending methanol with petroleum products, leading to concerns about engine and air quality due to methanol's toxic and corrosive nature. The regulations amend the Excise Regulations 1925 to exclude methanol from being used as an octane enhancer, impose a volume limit on products used for octane enhancement to prevent large-scale excise avoidance while allowing small-scale practices, and remove the excise exemption for blends of methanol and clean petroleum products. These changes aim to ensure that the excise system does not inadvertently support practices detrimental to fuel quality and environmental standards.
Scope and Application
The Excise Amendment Regulations 2000 (No. 4) serve to amend the Excise Regulations 1925 by modifying the existing provisions that exempt certain blends of petroleum products from excise under the Excise Act 1901. These regulations are particularly targeted at removing the excise exemption for blends of excise-free methanol with excise-paid petroleum products, aiming to address concerns about the detrimental effects of methanol on engine performance and air quality. The regulations apply to entities and individuals engaged in the blending of petroleum products, thereby impacting industries that manufacture or distribute petrol and related fuels. Geographically, these regulations are of Commonwealth jurisdiction and are intended to align with the broader national excise framework. The amendments exclude methanol and ethanol from being used as octane enhancers and impose a volume limit of not more than 10 litres on products used for octane enhancement, ensuring that while small-scale practices are not unduly constrained, large-scale excise avoidance is prevented. The changes are effective from the date of gazette, and they do not impact existing ethanol blending practices, which continue to be governed by separate regulatory provisions.
Key Provisions
The Excise Amendment Regulations 2000 (No. 4) primarily serve to modify the Excise Regulations 1925 by removing the excise exemption that pertains to blends of methanol and any clean petroleum product. According to Section 164 of the Excise Act 1901 (the Act), the Governor-General is empowered to establish regulations that provide the necessary framework for the implementation of the Act or the management of any business related to excise. Section 77J of the Act allows for the specification of an excisable blended petroleum product as an exempt blended petroleum product, a provision that is further detailed in Regulation 176 of the Excise Regulations 1925. The amendments introduced by the Excise Amendment Regulations 2000 (No. 4) intend to adjust these provisions by excluding methanol from being used as an octane enhancer under Regulation 176(2)(h) and by imposing a volume limit on the products that may be used for octane enhancement purposes. Furthermore, these regulations remove the excise exemption for blends of methanol and any clean petroleum product under Regulation 176(2)(k) by deleting that regulation.
The Excise Amendment Regulations 2000 (No. 4) impose several obligations and requirements on parties and entities governed by the Excise Act 1901. Firstly, the regulations exclude methanol (and ethanol) from the list of products that can be used as octane enhancers under Regulation 176(2)(h). This exclusion ensures that the blending of methanol and petroleum products no longer qualifies for excise exemption. Additionally, a volume limit of not more than 10 litres is imposed on products that may be used for octane enhancement purposes. This limit aims to prevent large-scale excise avoidance while allowing small-scale practices by private parties to remain unaffected. These amendments necessitate compliance with the new regulatory framework, ensuring that any blends involving methanol and petroleum products are subject to appropriate excise liabilities.
The Excise Amendment Regulations 2000 (No. 4) introduce several potential consequences and penalties for non-compliance. While the explanatory statement does not explicitly state the penalties for breach, the Excise Act 1901 provides a general framework for penalties under Section 219. Generally, the Act provides for penalties that can include fines, imprisonment, or both, depending on the nature and severity of the breach. For instance, Section 219(1) outlines that any person who contravenes certain provisions of the Act can be fined up to 10,000 penalty units, while Section 219(2) specifies that an individual officer who contravenes certain provisions can be fined up to 1,000 penalty units or be imprisoned for up to two years, or both. These penalties underscore the importance of adhering to the regulations and the potential ramifications for non-compliance.
In summary, the Excise Amendment Regulations 2000 (No. 4) are designed to refine the excise framework by excluding methanol from the list of products that can be used as octane enhancers and by imposing a volume limit on such products. These regulations are intended to prevent large-scale excise avoidance while maintaining flexibility for small-scale practices. Compliance with these regulations is essential to avoid the potential penalties, which include fines and imprisonment, as stipulated under the Excise Act 1901. The amendments took effect upon gazettal, ensuring that the revised regulatory framework is promptly enforced.