EXPLANATORY STATEMENT
EXCISE ACT 1901
EXCISE REGULATIONS (AMENDMENT)
STATUTORY RULES 1990 NO. 223
ISSUED BY THE AUTHORITY OF THE MINISTER OF STATE FOR SMALL BUSINESS AND CUSTOMS
Section 164 of the Excise Act 1901 (“the Act”) provides in part that “The Governor-General may make regulations not inconsistent with this Act prescribing all matters which by this Act are required or permitted to be prescribed or as may be necessary or convenient to be prescribed for giving effect to this Act …”
Regulation 175 of the Excise Regulations prescribes the manner in which imported petrol on which customs duty has not been paid may be blended with petrol manufactured in Australia, and then prescribes the manner of calculating the duty payable on the resulting mixture.
Regulations 179 and 180 provide a mechanism by which Customs may audit the practices of brewers, distillers, or manufacturers of excisable goods. The regulations require those persons to provide full disclosure to any questions asked by a Collector or any officer authorised by the Collector in relation to excisable goods (regulation 179) and to produce relevant records on demand (regulation 180).
Section 24 of the Excise Act 1901 provides that excisable goods and goods liable to duties of Customs may, while subject to the control of the Customs, be used in the manufacture of excisable goods in prescribed cases and subject to prescribed conditions. Regulation 2A and Schedule 2 of the Regulations provide the mechanism by which this prescription takes place.
Background
The Statutory Rules effect a number of changes to several of the Excise Regulations, as follows:
a) Regulation 175 is repealed on advice from the Attorney-General’s Department that the Regulation may be beyond power;
b) Regulations 179 and 180 are amended to extend the disclosure obligations contained in those regulations to any excisable goods or goods liable to duties of Customs that under Section 24 of the Act were used, or are held for use, by the brewer, distiller or manufacturer in the manufacture of excisable goods;
c) Schedule 2 to the Regulations is amended:
i) to omit the reference to “essences or flavourings containing spirits” in item 5 to reflect the fact that the spirit in essences and flavourings is no longer subject to a rate of customs duty which includes an excise duty element, and
ii) to add two new items to the Schedule, one of which effectively transfers the provisions of subregulation 175(1) to Schedule 2 in consequence of the proposed repeal of that regulation and the other to allow the blending of imported and Australian spirit wholly under the excise regime rather than under the present arrangements whereby blending and subsequent duty calculation occurs under a combination of both customs and excise regimes, which is unduly complex.
Details of the amendments are as follows:
Regulation 1: Repeals Regulation 175 on advice from the Attorney-General’s Department that the Regulation may be beyond power because it contains taxing provisions enabling the collection of the difference between the customs duty and the excise duty;
Regulation 2: Amends regulation 179 to extend the disclosure obligations contained in those regulations to any excisable goods, or goods liable to duties of Customs, that, under section 24 of the Act, were used, or are held for use, by the brewer, distiller or manufacturer in the manufacture of excisable goods.
This amendment will ensure that imported goods which are liable to duties of Customs and are entered for use in the manufacture of excisable goods are in fact used in the manufacture of such excisable goods. It is intended to overcome a problem presently experienced of establishing if in fact concessionally entered goods are used in the manufacture of excisable goods.
Item 44 of the Fourth Schedule to the Customs Tariff Act 1987 provides concessional entry for goods for use in the manufacture of excisable goods in terms of section 24 of the Excise Act 1901.
Regulation 3: Amends Regulation 180 in the same way as discussed above in relation to Regulation 179.
Regulation 4: Amends Schedule 2 to the Regulations to:
i) omit the reference to “essences or flavourings containing spirits” in item 5 to reflect the fact that the spirit in essences and flavourings is no longer subject to a rate of customs duty which includes an excise duty element (paragraph 1*1);
ii) add a new item 8 to the Schedule which effectively transfers the provisions of subregulation 175(1) to Schedule 2 in consequence of the repeal of that regulation (paragraph (b));
iii) add a new item 9 to the Schedule to allow the blending of imported and Australian spirit wholly under the excise regime rather than under the present arrangements whereby blending and subsequent duty calculation occurs under a combination of both customs and excise regimes, which is unduly complex.
Regulation 75 of the Customs Regulations allows an owner of imported spirit to blend it in a warehouse with the permission of a Collector. Duty is then payable upon the entry for home consumption of the blended product, based upon the respective proportions of Australian and imported spirit. The duty is calculated on the rates applicable to the equivalent spirits under both the Excise Tariff Act and Customs Tariff Act.
The new item 9 specifies the usual conditions for permitting such blending; viz, the manufacturer must be the holder of a requisite licence; but also requires that:
the imported spirit must be blended with spirits of a like kind which have been distilled in Australia (item 9 Conditions (2Wa) and fb)); and
the blended product must contain a greater proportion of Australian spirit than imported spirit (item 9 Condition U1).
These additional conditions will enable current industry practices to be met and a high level of Customs control to be maintained.