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  • Your excise obligations on excisable fuel blends

    If you manufacture an excisable fuel blend, you must hold an excise manufacturer licence. It is an offence to undertake excise manufacture or store excisable goods on which duty has not been paid, without the relevant licence.

    You must also report the quantity of product being delivered into home consumption (Australian domestic market) on an Excise return and pay excise duty, when applicable.

    You will need our permission to move any excisable product to another licensed premises or for export without first paying the applicable excise duty.

    Excise duty payable on excisable fuel blends

    Generally the total volume of a fuel blend will be subject to excise duty less any duty (customs duty on imported fuels or excise duty on excisable fuels) that has previously been paid on any fuel components.

    From 1 July 2015, to work out the amount of duty you can deduct for blends containing duty paid biofuels (biodiesel or fuel ethanol), multiply the quantity of biofuel by the excise duty rate even if the biofuel was imported and with customs duty paid at a higher rate.

    Example 2: Biodiesel blended with underbond diesel

    All Seasons Fuel Blenders (ASFB) operate a licensed site where they blend biodiesel with underbond diesel.

    ASFB buys 20,000 litres of imported and customs duty paid biodiesel. They then blend the biodiesel with the 80,000 litres of underbond diesel on 15 July 2015.

    ASFB delivers the 100,000 litres of B20 (20% biodiesel and 80% diesel) on 22 July 2015 under their periodic settlement permission.

    When calculating their duty liability, they multiply the volume of diesel by the excise duty rate for diesel (80,000 litres x $0.389 = $31,120) and multiply the volume of biodiesel by the duty rate for biodiesel (20,000 litres x $0.00 = $0.00). They can deduct duties already paid on a component of the blend, however in calculating the duty already paid they must treat the biodiesel as excisable, even though it was imported.

    As the excise duty rate for biodiesel is nil on 22 July 2015, they have a zero deduction (20,000 x $0.00 = $0). Therefore total excise duty of $31,120 is payable on the 100,000 litres of B20 delivered.

    This example applies equally to imported fuel ethanol.

    End of example

    The excisable components of a blend must be duty paid if applicable, even if:

    • the resulting blend is not excisable under the Excise Tariff Act
    • the process undertaken is not excise manufacture.

    This means that if you blend underbond excisable fuel, it must occur at a licensed premises and you must pay excise duty on the excisable fuel components either:

    • before you blend them
    • as stated in your periodic settlement permission.

    See also:

      Last modified: 07 Feb 2017QC 19106