EXPLANATORY STATEMENT
EXCISE REGULATIONS (AMENDMENT)
STATUTORY RULES 1988 NO. 216
ISSUED BY THE AUTHORITY OF THE MINISTER OF STATE FOR SCIENCE, CUSTOMS AND SMALL BUSINESS
Paragraph 50(1)(k) and Regulation 56 of the Excise Regulations (“the Regulations”) provide that a refund of excise duty paid on the production of beer may be obtained if the beer has been destroyed with the permission of a Collector of Customs as unfit for human consumption, or if it is returned for whatever reason to the brewery that produced the beer, within 90 days of the day the beer left the brewery of production.
On Budget night, 23 August 1988, the Minister for Science, Customs and Small Business tabled a proposal to alter the Excise Tariff, which significantly reduced the amount of excise payable on the production of beer as from 12.01 a.m. on 24 August 1988. As a consequence of this change, an amendment has been made to the Excise Regulations with effect from the same time, so as to avoid any undue loss of Government revenue by an unrestricted use of an existing refund circumstance contained in the Regulations.
So as to prevent any possible misuse of this refund circumstance, and to keep the pecuniary level of the circumstance at or near the quarterly average for last year of approximately $200,000, a ceiling has been put on refunds of duty for the first 90 day period after 23 August 1988 as follows:
The regulation provides;
• where beer has been returned to the brewery of manufacture pursuant to refund circumstance 50(1)(k)(i) during the 90 day period commencing on 24 August 1988, the total amount that may be refunded in respect of claims relating to that brewery during that period is an amount equal to 30% of the amount refunded in respect of beer returned to that brewery under that circumstance in the previous year (paragraph (a)); or
• where beer has been destroyed with the permission of the Collector pursuant to refund circumstance 50(1)(k)(ii) (eg. spoilt beer) and the Collector’s permission was given during the 90 day period commencing on 24 August 1988, the total amount that may be refunded in respect of claims relating to that brewery during that period is an amount equal to 30% of the amount refunded in respect of beer destroyed from that brewery under that circumstance in the previous year (paragraph (b)).
Overview
The Excise Regulations (Amendment) Statutory Rules 1988 No. 216, issued under the authority of the Minister of State for Science, Customs, and Small Business, were enacted to address the potential misuse of excise duty refunds related to the production of beer. This amendment was introduced following a significant reduction in the excise tariff on beer, which was announced on Budget night on 23 August 1988. The problem that the amendment sought to resolve was the risk of an undue loss of government revenue due to the unrestricted use of the refund circumstance provided in the Regulations. The policy objective was to ensure that the financial impact of the refund remained consistent with the quarterly average of approximately $200,000 from the previous year.
To prevent misuse and maintain the pecuniary level of the refund, the regulations introduced a ceiling on refunds for the first 90-day period following the tariff reduction. This ceiling limited the total amount that could be refunded to breweries either returning beer to the brewery of manufacture or having beer destroyed with the Collector’s permission, to 30% of the amount refunded in the previous year under the same circumstances. This measure aimed to strike a balance between accommodating legitimate claims and safeguarding government revenue.
Scope and Application
The Excise Regulations (Amendment) Statutory Rules 1988 No. 216 apply to breweries in Australia that produce beer and are subject to excise duty under the Excise Act 1901. The regulations specifically target the refund of excise duty for beer deemed unfit for human consumption or returned to the brewery within 90 days of leaving the brewery. The amendment, issued by the authority of the Minister of State for Science, Customs and Small Business, seeks to prevent misuse of the refund circumstance following a significant reduction in excise duty on beer effective from 24 August 1988. The geographic reach of these regulations is national, applying to all breweries across Australia. The regulations impose a ceiling on refunds to avoid undue loss of government revenue, limiting the total refund amount to 30% of the amount refunded for the same circumstance in the previous year. This applies to both beer returned to the brewery and beer destroyed with Collector of Customs permission. The amendment does not introduce new exclusions, exemptions, or thresholds but modifies existing provisions to address the new fiscal environment.
Key Provisions
The Excise Regulations (Amendment) Statutory Rules 1988 No. 216 introduce amendments to the existing refund provisions for excise duty paid on the production of beer. Specifically, section 50(1)(k) of the Excise Regulations allows for a refund of excise duty if the beer is either returned to the brewery of production within 90 days of leaving the brewery, or if it is destroyed with the permission of a Collector of Customs as unfit for human consumption. These provisions are being amended to include a ceiling on the amount of refunds that can be claimed during the first 90 days following the implementation of the new excise tariff changes on 24 August 1988. This amendment aims to limit potential misuse of the refund provisions and to maintain the average annual refund level at around $200,000.
The new regulations establish a cap on the total amount that may be refunded for each brewery during the initial 90-day period. If beer is returned to the brewery under the refund circumstance 50(1)(k)(i), the refund will be limited to 30% of the amount refunded for beer returned to the same brewery under the same circumstance in the previous year. Similarly, if beer is destroyed under the refund circumstance 50(1)(k)(ii), the refund will be limited to 30% of the amount refunded for beer destroyed from the same brewery under the same circumstance in the previous year. This limitation ensures that the refund amounts remain consistent with the quarterly average of the previous year.
Breweries and other entities affected by these regulations must comply with the new refund limits by ensuring that their claims do not exceed the specified percentages. They must also keep accurate records of the amounts refunded in the previous year to accurately calculate the allowable refund amounts for the current period. Failure to comply with these provisions may result in penalties, including the possibility of having to repay any excess amounts claimed.
There are potential civil and criminal consequences for non-compliance with the amended regulations. If an entity knowingly or negligently claims a refund in excess of the permitted amount, they may face penalties under the Excise Act 1901. These penalties can include fines and, in severe cases, criminal prosecution. The exact penalties depend on the circumstances of the breach but can be significant, reflecting the seriousness of attempting to defraud the government of excise revenue.