Excise guidelines for duty-free shops

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7 MAKING DUTY-FREE SALES: INWARDS

7.1 PURPOSE

This Chapter deals with:

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making inwards duty-free sales

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conditions travellers must be made aware of, and

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penalties that can apply to offences in relation to duty-free shops.

7.2 INTRODUCTION

In general terms, inwards duty-free shops will not pay duty. However, excise duty will be payable when ' excisable goods ' are unable to be accounted for – for example, stock shortages.

This Chapter focuses on the rules that you need to follow when making duty-free sales from an inwards duty-free shop.

7.3 POLICY AND PRACTICE

7.3.1 INWARDS DUTY-FREE SHOPS

An inwards duty-free shop is authorised to sell airport shop goods which can be excisable or customable goods. We provide authorisation for excisable goods while the Australian Border Force is responsible for authorisations dealing with imported goods.

Inwards duty-free shops sell to ' relevant travellers ' who have just completed an ' international flight ' from a place outside Australia and are purchasing excisable product prior to clearing the Customs barrier.

Purchases of excisable goods by inward travellers form part of the (Customs) passenger concession. Provided the excisable goods are within the passenger concession limits, they remain free of duty. ^[192]

Specific controls on inwards duty-free shops exist so that sales can only be made to relevant travellers.

Identifying a 'relevant traveller'

You must not sell goods to a person in your shop unless the person ^[193] :

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is a relevant traveller ^[194] , and

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shows a ticket or other document that confirms that they have arrived in Australia on an international flight.

Mandatory signage

You must display prominent signs that clearly state the ^[195] :

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amount of alcohol products that may be entered for home consumption by a relevant traveller free of excise duty, and

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conditions (if any) under which, for the purposes of the Excise Act, a traveller needs to comply in relation to their purchase.

Internet and phone sales

You may arrange sales through the internet or phone. You can do so as long as ^[196] :

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the purchaser is, or intends to be, a relevant traveller

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they give details of their intended arrival in Australia (including the flight number or other destination of the international flight)

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you inform the traveller of the

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amount of alcohol that may be entered free of excise duty, and

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conditions (if any) under which, for the purposes of the Customs Act 1901, a traveller is to comply in relation to the purchase of the goods, and

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the agreement is subject to the condition that the sale takes place in the shop – that is, the traveller picks the goods up in the shop.

Prior to handing the goods to the traveller, you must sight the ticket or other document for the relevant flight confirming the details provided at the time the agreement was entered into. ^[197]

Record keeping and reporting

Records that need to be kept

You must keep records as specified and may be required to notify us of all sales made to which your permission applies. ^[198]

These records may include:

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sales of excisable product

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stock records for excisable products

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' underbond ' delivery notes for goods received

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underbond delivery notes for goods removed

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copies of approved single movement permissions for movement in and out of premises covered by your licence

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copies of approved ' remissions ', and

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documentation relating to your physical stocktakes.

Reports that need to be prepared

You are not required to prepare any special reports.

7.4 PROCEDURES

7.4.1 MORE INFORMATION

If you need more information on excise as it relates to duty-free shops, contact us via ATO Online Services or the other options listed on Contact us about excisable alcohol .

We will ordinarily respond to written information requests within 28 days. If we cannot respond within 28 days, we will contact you within 14 days to obtain more information or negotiate an extended response date.

7.5 PENALTIES THAT CAN APPLY IN RELATION TO DUTY-FREE SHOPS

The following are the penalties that may apply after conviction for an offence.

Move, alter or interfere

If you move, alter or interfere with excisable goods that are subject to ' excise control ', without permission, the penalty is a maximum of 2 years in prison or the greater of 500 ' penalty units ' and 5 times the amount of duty on the excisable goods. ^[199]

Note: this includes moving underbond excisable goods from your premises to any other location or for export.

If your movement of underbond excisable goods does not comply with the permission to move the underbond excisable alcohol products, the penalty is a maximum of 2 years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable goods. ^[200]

Deliver

If you ' deliver excisable goods into the Australian domestic market ' contrary to your permission, the penalty is a maximum of 2 years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable goods. ^[201]

Records

If you do not keep, retain and produce records in accordance with a ' direction under section 50 ' of the Excise Act, the penalty is a maximum of 30 penalty units.

Evade

If you evade payment of any duty which is payable, the maximum penalty is 5 times the amount of duty on the excisable goods or, where a court cannot determine the amount of that duty, the penalty is a maximum of 500 penalty units. ^[202]

False or misleading statements

If you make a false or misleading statement to us, the penalty is a maximum of 50 penalty units. ^[203]

7.6 TERMS USED

Deliver into the Australian domestic market

Deliver into the Australian domestic market ^[204] is the term we use in this Guide for when excisable goods are released into domestic consumption. The term used in the legislation is 'deliver for home consumption'.

Normally, this will be by delivering the goods away from premises covered by a licence but includes using those goods yourself (for example, sales to staff).

The term 'home consumption' is not defined in the Excise Act and there is no definitive case law that looks at the issue in question. However, there are several cases where issues closely related to it are considered. ^[205]

The conclusion drawn from those cases is that 'home consumption' refers to the destination of goods as being within Australia as opposed to exporting them.

Excisable goods

Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are listed in the Schedule, and manufactured or produced in Australia.

For operators of duty-free shops, this will include:

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alcohol goods that are produced or manufactured in Australia and are subject to excise, and

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imported alcohol goods that have undergone a process of manufacture or production in Australia – for example, high-strength imported whisky which has been reduced by adding water (in Australia) before it is bottled, constitutes manufacture or production for excise purposes. Vodka imported in bulk and repackaged in Australia, does not constitute manufacture for excise purposes.

This will not include:

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other imported alcohol goods (because these goods are subject to customs duty)

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wine (which is generally subject to wine equalisation tax), and

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cigarettes and other tobacco goods as there is currently no licensed manufacture of tobacco in Australia.

For more information about customable alcoholic beverages, refer to Chapter 22 of Schedule 3 to the Customs Tariff Act 1995.

Examples of excisable goods include Australian-made:

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beer

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spirits, and

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pre-mixed drinks known as ready-to-drink beverages.

Excise control

Section 7 of the Excise Act refers to the CEO as having 'general administration of this Act'. In this Guide, we will also refer to this general administration as excise control.

Goods are subject to excise control from the point of manufacture until they have been delivered into the Australian domestic market (referred also as to home consumption ^[206] ) or for export.

Goods subject to excise control cannot be moved, altered or interfered with except as authorised by the Excise Act.

International flight

An international flight is defined as a flight, whether direct or indirect, by an aircraft between ^[207] :

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a place in Australia from which the aircraft takes off and a place outside Australia at which the aircraft lands or is intended to land ^[208] , or

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a place outside Australia from which the aircraft took off and a place in Australia at which the aircraft landed.

Penalty units

The value of a penalty unit is contained in section 4AA of the Crimes Act 1914, and is indexed regularly. The dollar amount of a penalty unit is available at Penalties .

Relevant traveller

A relevant traveller is:

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for outwards duty-free shop purposes – a person who intends to make an international flight or international voyage, whether as a passenger on, or as a member of the crew (or the pilot or master) of an aircraft or ship ^[209]

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for inwards duty-free shop purposes – a person who has arrived in Australia on an international flight, whether as a passenger on, or as a member of the crew (or the pilot) of, an aircraft and has not been questioned, for the purposes of the Customs Act 1901, by an officer of Customs, in respect of goods carried on that flight. ^[210]

Remission

A remission of excise duty extinguishes the liability for duty that was created at the point of manufacture, in prescribed circumstances.

For more information about remissions, refer to Chapter 9 Remissions and exemptions.

Section 50 direction

This is a written instruction issued under section 50 of the Excise Act to a licensed manufacturer, or proprietor of premises covered by a storage licence, to keep specified records, furnish specified returns, retain records for a specified period and produce those records on demand by us. The written instruction is incorporated into the licence conditions.

Underbond

This is an expression not found in excise legislation but it is widely used to describe goods that are subject to excise control. Excisable goods that are subject to excise control are commonly referred to as 'underbond goods' or as being 'underbond'. This includes goods that have not yet been delivered into the Australian domestic market and goods moving between premises under a movement permission.

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Amendment history

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