Excise guidelines for the tobacco industry

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Chapter 9 - Offences


This chapter deals with:

  • offences under the Excise Act
  • penalties
  • infringement notices, and
  • application of the Criminal Code.

9.1 Introduction

This chapter is a general discussion on offences. It is not meant as legal advice and you are encouraged to seek independent legal advice in relation to your own individual circumstances.

There are a number of acts or omissions under the Excise Act that are offences.

A conviction for an offence may result in a penalty as provided for within the Excise Act. The penalty provided may be in the form of penalty units , a term of imprisonment or an amount of money calculated by a set formula.

9.2 Offences

Certain acts or omissions are offences under the Excise Act for which penalties are prescribed.

For penalties to apply to an offence (except where an infringement notice has been issued), you must first be convicted of the offence in a court of law following prosecution.

Certain offences under the excise legislation are strict liability offences as defined in section 6.1 of the Schedule to the Criminal Code. Essentially, strict liability means that the offence consists of the physical act or omission only. It is not necessary for the court to find that you knowingly committed, or were reckless or negligent in relation to, the act or omission.

Some sections of the Excise Act prescribe the following two levels of offence for similar conduct a:

  • higher penalty applies to an act or omission which was intentionally or recklessly committed, that is, there is a fault element, and
  • lower penalty applies to the same act or omission on a strict liability basis, that is there is no fault element.

Example 9A

Section 26 of the Excise Act prescribes that licensed manufacturers are to manufacture in accordance with the Act and their licence.

  1. A licensed manufacturer must not intentionally manufacture excisable goods knowing, or being reckless as to whether, the manufacture contravenes this Act or the manufacturer licence.

    Penalty: two years imprisonment or 500 penalty units.
  2. A licensed manufacturer must not manufacture excisable goods in contravention of this Act or the manufacturer licence.

    Penalty: 100 penalty units.
  3. Strict liability applies to subsection (2).

Section 107AA of the Excise Act codifies that the tobacco related offence provisions in Division 308 in Schedule 1 to the Taxation Administration Act 1953 (TAA), are an offence under the Excise Act.

Maximum penalties under the TAA for the unlawful possession, sale or manufacture of tobacco goods (including tobacco seed, plant and leaf), whether domestic or imported, are much greater than for those in the Excise Act which encompasses all excisable goods (alcohol, tobacco, fuel and lubricants).

9.3 Penalties

The Excise Act contains many provisions that include a penalty at the foot of the section or subsection. This means that if you are convicted of an offence against the particular provision then you can receive a penalty not exceeding the penalty mentioned. [238] The penalty listed is thus the maximum penalty but the Courts can impose a lesser penalty.

Example 9B

A person manufactures excisable tobacco goods outside their licensed premises. This is a contravention of subsection 26(2) which says that a licensed manufacturer must not manufacture excisable goods in contravention of this Act or the manufacturer licence. The penalty at the foot of subsection 26(2) is 100 penalty units. We bring a court action against the person and the court convicts the person. The penalty cannot exceed 100 penalty units but it can be less.

As indicated above certain offences provide for alternative penalties, for example subsection 26(1) of the Excise Act provides for a penalty of twoyears imprisonment or 500 penalty units.

For some offences if a person is convicted of that offence then the courts can impose both penalties. [239]

Where an offence also causes goods to be forfeited [240] , conviction by the courts results in the forfeited goods being condemned. [241] This means they are no longer your property and we can dispose of the goods as we see fit.

9.4 Infringement notices

We may issue an infringement notice [242] as an alternative to prosecution for unlawfully possessing, or unlawfully selling excisable goods. [243] An infringement notice imposes a penalty of 20 penalty units.

To issue an infringement notice, we must have a reasonable belief that you have committed the offence. Notices must be issued within 12 months of the commission of the offence. [244]

The penalty is payable on the day specified in the infringement notice which must be at least 28 days after the day the notice was issued. [245] In the event of non-payment, prosecution action may be brought against the person who committed the alleged offence.

You cannot be prosecuted for the same offence where an infringement notice has been issued unless the infringement notice is withdrawn.

We can withdraw an infringement notice and if we do so after you have paid the penalty we must refund that to you. [246]

9.5 Application of the Criminal Code

Chapter 2 of the Criminal Code applies to offences against the Excise Act. However, Parts 2.5 and 2.6, which are in Chapter 2 of the Criminal Code, do not apply. [247] In some courts, Excise prosecutions are able to be treated as criminal matters while in other courts they are treated as civil matters. This, obviously, has an effect on issues such as the burden and standard of proof required.

You are encouraged to seek independent legal advice in relation to your own individual circumstances.

Latest update

December 2021

SectionChanges and updates
ThroughoutThis chapter was updated to take into account law changes that impacted the tobacco industry, which repealed provisions allowing for the movement and storage of excisable tobacco goods on which duty has not yet been paid. The update also reflects the current duty rate and replace references from the old Business Portal to the new Online Services for Business.

Updated to new format and style including footnotes.

Details of previous updates are available through the versions linked to in the table below.


You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).

Excise guidelines for the tobacco industry
  Date: Version:
  1 July 2006 Original document
  1 September 2014 Updated document
  1 April 2015 Updated document
You are here 17 December 2021 Current document

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