Excise Regulations (Amendment) 1997 No. 340
EXPLANATORY STATEMENT
STATUTORY RULES 1997 No. 340
Issued by the Authority of the Minister for Customs and Consumer Affairs
Excise Act 1901 (C'th)
Excise Regulations (Amendment)
Section 164 of the Excise Act 1901 (the Act) provides that the Governor-General may make regulations not inconsistent with the Act prescribing all matters which by the Act are required or permitted to be prescribed for giving effect to the Act or as may be necessary or convenient to be prescribed for giving effect to the Act or for the conduct of any business relating to the Excise. The Act applies to certain goods which are produced or manufactured in Australia.
The purpose of the Regulations is to amend the Excise Regulations following the enactment of the Excise Tariff Amendment Act (No. 1) 1997. The Excise Tariff Amendment Act (No. 1) 1997 amended the Schedule to the Excise Tariff Act 1921 (the Tariff Act) to ensure the continuing excisability of all beverages which contain distilled alcohol, including spirits, regardless of their alcohol content.
In November 1994, when Carlton and United Breweries (CUB) commenced the manufacture of the product known as "Subzero Alcoholic Soda", the Australian Customs Service (the ACS) considered this beverage excisable under sub-item 2(H) of the Schedule to the Tariff Act as a spirituous beverage. CUB appealed the decision of the ACS to the Administrative Appeals Tribunal (AAT). The AAT determined that the production of "Subzero", with such a low alcohol content by volume, could not be described as spirituous and was therefore not excisable under sub-item 2(H). The Federal Court upheld the decision of the AAT.
In order to ensure the continuing excisability of all beverages containing distilled alcohol, the Tariff Act has been amended to:
(i) delete all references to "spirituous beverages" in the Schedule and item 2; and
(ii) clarify that excise liability is imposed upon all beverages which contain distilled alcohol (except fortified wine), regardless of the alcohol content (new subitem 2(H) of the Schedule). By removing the term "spirituous beverage" from the Tariff Act, any connotation as to the strength that an alcoholic beverage must be before it is excisable has been removed.
With the passage of these amendments, several amendments have been made to the Excise Regulations to replace all references to "spirituous beverages". Part XX (regulations 224 to 234D) of the Excise Regulations and regulation 244 previously set out the licensing requirements for the manufacture of spirituous beverages and other requirements on the manufacturers of spirituous beverages, such as packaging and labelling requirements. All the references to spirituous beverages in these regulations have been replaced. Items 2 and 5 of Schedule 2 to the Excise Regulations also prescribed circumstances where spirituous beverages may be used with goods subject to duties of Customs in the manufacture of excisable goods (for the purposes of section 24 of the Act) and these references have been replaced.
In particular, each reference in the Excise Regulations to "spirituous beverages' has been deleted and replaced with "liqueurs or beverages containing distilled alcohol". As a corollary to this, the definition of "spirituous beverages" in subregulation 2(1) of the Excise Regulations has been deleted and the new definition of "beverages containing distilled alcohol" has been inserted. These are defined as "beverages that come within sub-item 2(H) of the Schedule to the Excise Tariff Act 1921".
These are technical amendments only and no changes have been made to the licensing requirements or the other requirements which apply to the manufacturers of liqueurs and beverages containing distilled alcohol.
The Regulations commenced on gazettal.
Overview
The Excise Regulations (Amendment) 1997 No. 340, issued under the authority of the Minister for Customs and Consumer Affairs, was enacted to amend the Excise Regulations following the passage of the Excise Tariff Amendment Act (No. 1) 1997. This legislation responds to a legal dispute concerning the exciseability of low alcohol content beverages, exemplified by the Carlton and United Breweries' product "Subzero Alcoholic Soda". The Excise Tariff Amendment Act (No. 1) 1997 was introduced to clarify that excise liability applies to all beverages containing distilled alcohol, regardless of alcohol content, thereby ensuring the continuing excisability of such beverages. The Excise Regulations (Amendment) 1997 No. 340 thus makes technical adjustments to excise regulations to align with this legislative change, replacing references to "spirituous beverages" with "liqueurs or beverages containing distilled alcohol" and updating related definitions and provisions accordingly. The amendments ensure that the regulatory framework reflects the updated exciseability criteria without altering existing licensing or manufacturing requirements.
Scope and Application
The Excise Regulations (Amendment) 1997 No. 340 applies to the Excise Act 1901, specifically to ensure the continuity of excise application on all goods produced or manufactured in Australia that contain distilled alcohol, regardless of their alcohol content. The regulations are made under section 164 of the Excise Act, which allows for the creation of rules to implement the Act or for conducting business related to excise. The amendments arise from the Excise Tariff Amendment Act (No. 1) 1997, which revised the Excise Tariff Act 1921 to ensure the continued excisability of beverages containing distilled alcohol, including low-alcohol content beverages previously contested as non-spirituous. The amendments remove references to "spirituous beverages" and replace them with "beverages containing distilled alcohol" to clarify that all such beverages, irrespective of alcohol content, are subject to excise. The changes are purely technical and do not alter the licensing or manufacturing requirements already in place. These regulations apply across Australia as they are made under Commonwealth authority. The scope of the Act is thus extended to cover all alcoholic beverages produced within the country, ensuring a consistent application of excise laws.
Key Provisions
The Excise Regulations (Amendment) 1997 No. 340 amends the Excise Regulations following the changes introduced by the Excise Tariff Amendment Act (No. 1) 1997. These amendments were necessary to ensure that all beverages containing distilled alcohol are subject to excise, regardless of their alcohol content. This change was triggered by the introduction of a product like "Subzero Alcoholic Soda" by Carlton and United Breweries, which the Australian Customs Service initially considered excisable but the Administrative Appeals Tribunal and subsequently the Federal Court found not to be. To address this, the Excise Tariff Amendment Act (No. 1) 1997 removed the term "spirituous beverages" and clarified that excise liability applies to all beverages containing distilled alcohol.
The amendments to the Excise Regulations (section 2) involve replacing all references to "spirituous beverages" with "liqueurs or beverages containing distilled alcohol". This change is reflected in regulations 224 to 234D of Part XX, as well as regulation 244, which set out the licensing requirements for the manufacture of these beverages. Additionally, items 2 and 5 of Schedule 2 have been updated to reflect the new terminology, ensuring that the circumstances where these beverages may be used in the manufacture of excisable goods are clearly defined. The definition of "spirituous beverages" has been removed and replaced with a new definition for "beverages containing distilled alcohol" as specified in sub-item 2(H) of the Schedule to the Excise Tariff Act 1921.
Entities and individuals subject to the Excise Act 1901 must adhere to these amended regulations, ensuring that all relevant licensing and manufacturing requirements are met for beverages containing distilled alcohol. This includes obtaining the appropriate licences for manufacturing these products and complying with packaging and labelling standards as stipulated in the Excise Regulations. The new definitions and regulatory language must be incorporated into their compliance and operational practices to avoid any misinterpretation or non-compliance with excise laws.
Breaches of the Excise Regulations can lead to significant legal consequences. Section 236 of the Excise Act 1901 outlines various offences related to non-compliance with the Act and Regulations, which may include penalties for manufacturing or importing excisable goods without a licence or for failing to comply with labelling and packaging requirements. The penalties for these offences can include substantial fines and, in more serious cases, imprisonment. For instance, the maximum penalty for knowingly making or importing an excisable article without a licence can amount to $22,000 for individuals and $110,000 for corporations, as stipulated in section 238. Additionally, failure to comply with the packaging and labelling requirements can result in fines up to $11,000 for individuals and $55,000 for corporations, as per section 239. These penalties underscore the importance of strict adherence to the Excise Regulations.