House of Representatives

Excise Amendment (Compliance Improvement) Bill 2000

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

Chapter 3 - Control of tobacco seed, plant and leaf

Outline of Chapter

3.1 This Chapter explains the amendments to the Excise Act 1901 (Excise Act), other than the licensing provisions, that are designed to counter the illicit trade in tobacco.

Summary of the amendments

3.2 A factor contributing to the growth in the illicit trade in tobacco is the ease by which tobacco leaf can be transported to unlicensed manufacturers. Currently, there are no laws regulating the movement of tobacco leaf.

3.3 Amendments to be made by this Bill will prohibit the movement of tobacco leaf without permission. An identification label will need to be attached to bales of tobacco leaf prior to their movement from a producer's premises or dealer's premises unless there is an express permission for movement without a label.

3.4 Other amendments will replace current provisions that make it an offence to buy tobacco leaf from a person other than a producer, dealer or manufacturer or to sell it to a person other than a dealer or manufacturer with comprehensive provisions prohibiting the buying, selling and possession of tobacco seed, plant and leaf.

Detailed explanation of the amendments

Unlawfully possessing tobacco seed, plant or leaf

3.5 New section 117C will prohibit a person who does not have a producer licence, dealer licence, manufacturer licence, or other permission under the Excise Act, from possessing or having the custody or control of tobacco seed, plants or leaf. A tiered penalty structure applies to this offence as follows:

·
if a person, without authority, possesses tobacco seed or plants either knowing, or reckless as to whether, the material is tobacco seed or plants:

-
2 years imprisonment; and/or
-
500 penalty units;

·
if a person, without authority, possesses tobacco leaf either knowing, or reckless as to whether, the material is tobacco leaf:

-
2 years imprisonment; and/or
-
the greater of 500 penalty units or 5 times the duty that would be payable if the leaf had been manufactured into tobacco and had then been entered for home consumption; or

·
if a person, without authority, possesses tobacco seed, plants or leaf irrespective of their state of mind - 100 penalty units.

[Schedule 1, item 52, new section 117C]

Permission to move tobacco leaf

3.6 The authorised movement of tobacco leaf is to occur by written permission specifying both the place from, and the place to, the leaf is to be moved. [Schedule 1, item 27, new subsection 44(1)]

3.7 It is proposed that a 'tobacco bale label' will be affixed to tobacco leaf while it is not located at the licensed premises of a producer, dealer or manufacturer. An express written permission will be required for tobacco leaf to be moved without a 'tobacco bale label' [Schedule 1, item 27, new subsection 44(2)] . A tobacco bale label is to be defined as a label that is in an approved form and which uniquely identifies a bale of tobacco leaf [Schedule 1, item 19, definition of 'tobacco bale label' in subsection 4(1)] .

3.8 Movement permissions may be made conditional on requirements specified in the permission being complied with [Schedule 1, item 27, new subsection 44(3)] . Failure to comply with these requirements will be an offence. A tiered penalty applies as follows:

·
if the person intentionally or recklessly fails to comply with a permission requirement:

-
2 years imprisonment; and/or
-
the greater of 500 penalty units or 5 times the duty, calculated according to the method prescribed in the regulations, that would be payable if the tobacco leaf had been manufactured into excisable goods and then entered for home consumption; or

·
if the person fails to comply with a requirement, irrespective of their state of mind - 100 penalty units.

[Schedule 1, item 27, new subsections 44(4) to (6)]

Moving tobacco leaf without permission

3.9 New section 117D will prohibit a person from moving tobacco leaf without permission. A tiered penalty structure applies to this offence as follows:

·
if a person, without permission, intentionally moves tobacco leaf either knowing, or reckless as to whether, the material is tobacco leaf:

-
2 years imprisonment; and/or
-
the greater of 500 penalty units or 5 times the duty that would be payable if the leaf had been manufactured into tobacco and had then been entered for home consumption; or

·
if a person, without permission, moves tobacco leaf, irrespective of their state of mind - 100 penalty units.

[Schedule 1, item 52, new section 117D]

Counterfeit tobacco bale labels

3.10 To support the authenticity of tobacco bale labels as a system of authorising the movement of tobacco leaf it will be an offence to make counterfeit tobacco bale labels. The maximum penalty for making counterfeit labels will be 500 penalty units. [Schedule 1, item 52, new subsection 117I(1)]

3.11 It will also be an offence to use a counterfeit tobacco bale label. A tiered penalty structure will apply to the offence as follows:

·
if a person uses a tobacco bale label either knowing, or reckless as to whether, the label is counterfeit - 500 penalty units; or
·
if a person uses a counterfeit tobacco bale label, irrespective of their state of mind - 100 penalty units.

[Schedule 1, item 52, new subsections 117I(2) to (4)]

Unlawfully buying tobacco seed or plant

3.12 New section 117E will prohibit a person from buying tobacco seed or plant from a person who is not a licensed producer or dealer. A tiered penalty structure applies to this offence as follows:

·
if a person buys tobacco seed or plant either knowing, or reckless as to whether, the seller is not a licensed producer or dealer:

-
2 years imprisonment; and/or
-
500 penalty units; or

·
if a person buys tobacco seed or plant from a person who is not a licensed producer or dealer, irrespective of their state of mind - 100 penalty units.

[Schedule 1, item 52, new section 117E]

Unlawfully buying tobacco leaf

3.13 Paragraph 120(1)(ii) of the Excise Act makes it an offence to buy tobacco leaf from a person who is not a registered producer or dealer or a licensed manufacturer. The current penalty is a fine not exceeding $1,000. As this does not constitute an effective deterrent to activity that undermines the taxation base for excise on tobacco, this Bill will replace the existing provisions with a specific offence provision containing stricter penalties. [Schedule 1, items 54 and 55]

3.14 New section 117F will prohibit a person from buying tobacco leaf from a person who is not a licensed producer, dealer or manufacturer. A tiered penalty structure applies to this offence as follows:

·
if a person buys tobacco leaf either knowing, or reckless as to whether, the seller is not a licensed producer, dealer or manufacturer:

-
2 years imprisonment; and/or
-
the greater of 500 penalty units or 5 times the duty that would be payable if the leaf had been manufactured into tobacco and had then been entered for home consumption; or

·
if a person buys tobacco leaf from a person who is not a licensed producer, dealer or manufacturer, irrespective of their state of mind - 100 penalty units.

[Schedule 1, item 52, new section 117E]

Unlawfully selling tobacco seed or plant

3.15 New section 117G will prohibit a person from selling tobacco seed or plant to a person who is not a licensed producer, dealer or manufacturer. A tiered penalty structure applies to this offence as follows:

·
if a person sells tobacco seed or plant either knowing, or reckless as to whether, the buyer is not a licensed producer, dealer or manufacturer:

-
2 years imprisonment; and/or
-
500 penalty units; or

·
if a person sells tobacco seed or plant to a person who is not a licensed producer, dealer or manufacturer, irrespective of their state of mind - 100 penalty units.

[Schedule 1, item 52, new section 117G]

Unlawfully selling tobacco leaf

3.16 Paragraph 120(1)(iii) of the Excise Act makes it an offence to sell tobacco leaf to a person who is not a registered dealer or a licensed manufacturer. The current penalty is a fine not exceeding $1,000. As this does not constitute an effective deterrent to activity that undermines the taxation base for excise on tobacco, this Bill will replace the existing provisions with a specific offence provision containing stricter penalties. [Schedule 1, items 54 and 55]

3.17 New section 117H will prohibit a person from selling tobacco leaf to a person who is not a licensed dealer or manufacturer. A tiered penalty structure applies to this offence as follows:

·
if a person sells tobacco leaf either knowing, or reckless as to whether, the buyer is not a licensed dealer or manufacturer:

-
2 years imprisonment; and/or
-
the greater of 500 penalty units or 5 times the duty that would be payable if the leaf had been manufactured into tobacco and had then been entered for home consumption; or

·
if a person sells tobacco leaf to a person who is not a licensed dealer or manufacturer, irrespective of their state of mind - 100 penalty units.

[Schedule 1, item 52, new section 117H]

Forfeiture of tobacco seed, plant and leaf

3.18 Section 116 of the Excise Act currently provides for the forfeiture of tobacco leaf that is found on premises where tobacco is manufactured illegally.

3.19 The circumstances in which material will be forfeited will be extended to situations where:

·
tobacco leaf is moved without permission [Schedule 1, item 50, new paragraph 116(1)(ba)] ;
·
tobacco seed, plant or leaf is found in the possession, custody or control of a person who does not have the requisite licence or other permission under the Excise Act [Schedule 1, item 50, new paragraph 116(1)(bb)] ; or
·
tobacco seed, plant or leaf is stored at premises that have not been specified in a relevant licence under this Act [Schedule 1, item 50, new paragraph 116(1)(bc)] .

In each of these situations, offences proposed by this Bill would be committed.

Liability of a producer or dealer for stock deficiency

3.20 Section 105 of the Excise Act authorises an officer to check the tobacco leaf stock of a producer or dealer. If a deficiency is found, the producer or dealer is liable to pay duty on the basis that the deficient amount had been manufactured into excisable goods.

3.21 This section will be amended to clarify that the liability to duty is on the basis that the deficient amount taken to have been manufactured into excisable goods had also been entered into home consumption on the day the deficiency was found. [Schedule 1, item 47]

Consequential amendments

Replacement of the 'proclaimed material' concept

3.22 Provisions of the Excise Act dealing with tobacco leaf currently use the term 'proclaimed material'. Proclaimed material is defined in subsection 4(1) as 'tobacco leaf, or material that is for the time being declared by Proclamation to be proclaimed material for the purposes of this Act'.

3.23 The amendments which extend control over tobacco seed, plant and leaf have made the 'proclaimed material' concept redundant. Consequently, the definition of 'proclaimed material' is to be repealed. [Schedule 1, item 13]


View full documentView full documentBack to top