EXPLANATORY STATEMENT
STATUTORY RULES 1987 No. 28
EXCISE REGULATIONS (AMENDMENT)
ISSUED BY THE AUTHORITY OF THE MINISTER OF STATE FOR INDUSTRY. TECHNOLOGY AND COMMERCE
The main purpose of the Statutory Rules is to amend Schedule 2 to the Excise Regulations (‘the Regulations) to introduce into that Schedule new cases and conditions to permit certain additional goods liable to duties of Customs to be used in the manufacture of excisable goods while subject to control of the Customs.
The new item 6 in paragraph 7(c) of the Statutory Rules will permit imported manufactured tobacco upon which Customs duty has not been paid to be used in the manufacture of excisable tobacco, cigars, cigarettes or snuff if the Australian tobacco content is not less than 50% by weight. The requirement of a 50% Australian tobacco content accords with the Government’s tobacco stabilisation plan presently in operation. New item 7 in paragraph 7(c) of the Statutory Rules adds a new prescribed case to permit imported spirit containing not less than 84% by volume of alcohol to be used in the manufacture of other excisable spirit subject to certain conditions. The introduction of this item gives effect to part of the Government’s decision on the Industries Assistance Commission’s report No. 390 on the Chemical and Plastics Industries.
The amending regulations provide as follows:
Regulation 1 - removes the definition of “spirituous beverages” to ensure that liqueurs manufactured by either a process of distillation or by mixing of spirit over specified vegetable substances are both subject to the excise controls set out in Part XX of the Excise Regulations.
Part XX of the regulations sets out certain requirements that have to be met by manufacturers of spirituous beverages, such as licensing requirements, security and removal of spirit.
The current definition only permits the controls to apply to liqueurs manufactured by the mixing process and not the increasingly popular distillation process.
Regulation 2 - amends regulation 58 of the regulations to provide for the payment of rebates of Excise duty, in addition to remissions or refunds as currently provided. Further, the amendment will also permit any rebate payable to be set off against the whole or part of a person’s liability for Excise duty, as is the case with remissions and refunds of duty. The amendments are required as a consequence of the Government’s decision to pay a rebate of excise duty on exports and free market sales of crude oil in the context of its crude oil policy.
Regulations 3 to 6 - amend regulations 78, 78A, 247 and 248 of the regulations to acquit undertakings by the Minister for Industry, Technology and Commerce to the Chairman of the Senate Standing Committee on Regulations and Ordinances to include review rights and notices of same in respect of certain decisions under the regulations. In particular -
• Notice in writing of a decision by the Comptroller not to approve payment of drawback under subregulation 78(1) or paragraph 78A(8)(b) is to be provided to the affected person not later than 30 days after the date of the decision (regulations 3 and 4);
• decisions made not to approve payment of drawback referred to in proposed subregulations 78(2) or 78A(9) are to be reviewable by the Administrative Appeals Tribunal (AAT) (regulation 5);
• Notices required to be made under proposed subregulations 78(2) or 78A(9) are to include a statement that applications may be made to the AAT for review of the respective decisions (regulation 6)
Regulation 7 - amends Schedule 2 to the regulations to -
(i) revoke condition (1) applicable to item 1 in the Schedule and the condition applicable to item 5 in the Schedule to remove the requirements that the consent of the Collector, is to be given before blending can occur. It has been determined that such requirements place unnecessary regulatory burdens upon manufacturers particularly as -
• controls are exercised over the licensing of manufacturers, stock control and accounting practices of manufacturers and manufacturing methods and formula; and
• permission is required to move goods from one warehouse to another; and
(ii) add two new cases to the Schedule dealing with the blending of imported tobacco with Australian tobacco (item 6) and imported spirit containing not less than 84% by volume of alcohol with Australian spirit (item 7) and specifies the conditions attaching thereto.
Overview
The Excise Regulations (Amendment) Statutory Rules 1987 (No. 28) were enacted to amend the Excise Regulations, aiming to address specific issues related to the use of certain goods in the manufacture of excisable products and the application of excise controls. This legislative amendment was introduced by the authority of the Minister of State for Industry, Technology, and Commerce. The primary objective of these regulations was to provide flexibility in the use of imported goods in the manufacturing of excisable products, such as tobacco and spirit, while ensuring appropriate controls are maintained. These amendments also sought to refine the excise controls on spirituous beverages, provide rebates for excise duty, and introduce review rights for certain decisions under the regulations.
Scope and Application
The Excise Regulations (Amendment) Statutory Rules 1987 No. 28, issued by the Minister of State for Industry, Technology and Commerce, pertain to the amendment of Schedule 2 of the Excise Regulations, which governs the manufacture and use of goods liable to excise duties. These regulations apply to entities involved in the manufacture and blending of excisable goods, particularly those using imported materials such as tobacco and spirit, and are intended to align with the government's tobacco stabilisation plan and the Industries Assistance Commission's report on the Chemical and Plastics Industries. The amendments extend to the Commonwealth, affecting manufacturers who operate under the control of Customs and Excise regulations. The rules introduce new cases and conditions to permit the use of imported goods in manufacturing, provided certain thresholds are met, such as the Australian tobacco content being at least 50% by weight and imported spirit containing not less than 84% by volume of alcohol. The regulations also include changes to rebate provisions for excise duty, licensing requirements for spirituous beverages, and review rights for certain decisions made by the Comptroller regarding drawback approvals. Additionally, the amendments remove certain regulatory burdens by revoking conditions that previously required the Collector's consent for blending and introduce new conditions for the blending of imported tobacco and spirit with Australian products.
Key Provisions
The Excise Regulations (Amendment) Statutory Rules introduce several key changes to the Excise Regulations. Most notably, Regulation 1 removes the definition of "spirituous beverages," ensuring that both liqueurs manufactured by distillation and by mixing are subject to excise controls. This change aligns with the government's broader policy of applying consistent excise regulations to all types of spirituous beverages. Regulation 2 introduces the possibility of rebates on excise duty, allowing these rebates to be set off against a taxpayer's liability for excise duty. This amendment follows the government's decision to implement a rebate on excise duty for exports and free market sales of crude oil, reflecting a shift in fiscal policy regarding crude oil.
Regulations 3 to 6 enhance the procedural fairness for decisions made under the Excise Regulations. Specifically, they require that written notice of a decision by the Comptroller not to approve drawback must be given within 30 days, and they establish review rights for certain decisions with the Administrative Appeals Tribunal (AAT). These regulations are in response to commitments made by the Minister for Industry, Technology, and Commerce to the Senate Standing Committee on Regulations and Ordinances. Regulation 7 makes significant changes to Schedule 2, removing certain blending conditions for tobacco and spirit and adding new cases that specify conditions under which imported goods can be used in the manufacture of excisable goods.
Entities governed by the Excise Regulations must now comply with the new definitions and conditions outlined in the amended regulations. Manufacturers must ensure that their operations meet the new licensing, security, and removal requirements for spirituous beverages as per Part XX of the Excise Regulations. They must also adapt to the new conditions for blending imported tobacco and spirit with Australian products, ensuring that the Australian content meets the specified thresholds. Furthermore, entities must be aware of the new procedural requirements, including the provision of written notices and the availability of review rights with the AAT for certain decisions.
Breaches of the Excise Regulations can result in both civil and criminal penalties. For example, failure to comply with the licensing and security requirements for spirituous beverages could lead to fines and other administrative penalties. Similarly, non-compliance with the new blending conditions or failure to provide the required notices could also result in penalties. The specific penalties depend on the nature and severity of the breach, but they can include substantial fines and, in some cases, imprisonment. The maximum penalties are not explicitly stated in the Statutory Rules but are typically set out in the primary legislation, the Excise Act 1901.