ATO Interpretative Decision

ATO ID 2001/595


Excise: Liability to pay an amount equal to the excise duty on excisable goods stolen from the premises of a licensed excise manufacturer or a licensed storage place.
FOI status: may be released
Status of this decision: Decision Current
CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.


Whether an excise licensee has a liability to pay an amount equal to the amount of duty ordinarily payable on underbond excisable goods (i.e., goods on which duty has not been paid) which have been stolen from their licensed premises.


An excise licensee has a liability to pay an amount equal to the amount of duty payable on underbond excisable goods stolen from their premises.


The goods are excisable and are subject to the control of Excise. The goods are stored at the premises of an excise licensee. The excise licensee is a licensed excise manufacturer or a proprietor of a licensed storage place.

No excise duty has been paid on the goods as the goods are yet to be "entered and delivered into home consumption".

The goods were stolen from the premises of a licensed manufacturer or from a licensed storage place.

Reasons for Decision:

Section 5 of the Excise Tariff Act 1921 imposes the duties of excise on the goods, which are described in the Schedule to the Act.

Subsection 4 (1) of the Excise Act 1901 defines 'CEO', 'Collector' and 'excisable goods'.

Parts III and IV of the Excise Act require a manufacturer of excisable goods, and a proprietor of a place for the storage of excisable goods on which excise duty has not been paid, to be licensed.

Excisable goods stored at a manufacturer's premises or at a licensed storage place are under the control of Excise until delivered for home consumption or for exportation, which ever occurs first (subsection 61 (1) Excise Act).

The manufacturer or the owner of excisable goods must pay the excise duty which is imposed by the Excise Tariff Act when the goods are entered for home consumption (section 54 Excise Act). No goods may be removed from a manufacturer's premises or licensed storage place without permission.

Even in circumstances where an excise licensee has taken reasonable precautions (such as secure premises with monitored burglar alarm) to keep excisable goods safe, a liability will arise under paragraph 60 (1) (a) Excise Act.

An excise licensee will incur a liability to pay an amount equal to the amount of duty payable on the stolen underbond excisable goods vide paragraph 60 (1) (a) Excise Act, which states:

'(1) Where a person (including a manufacturer) who has, or has been entrusted with, the possession, custody or control of excisable goods which are subject to the CEO's control:

fails to keep those goods safely; or
when so requested by a Collector, does not account for those goods to the satisfaction of a Collector;

the person shall, on demand in writing made by a Collector, pay to the Commonwealth an amount equal to the amount of the Excise duty which would have been payable on those goods, if they had been entered for home consumption on the day on which the Collector made the demand.'
This view is supported by the judgement of McTiernan J stated in Collector of Customs (N.S.W) v. Southern Shipping Co. Ltd. (1962) 107 CLR 279 (the Southern Shipping Case) at 290, 'The task of keeping goods safely cannot be said to have been fulfilled if the goods are stolen even though reasonable precautions were taken.'

Further, Taylor J in the Southern Shipping Case (at 296) said:

'That is to say, that whilst he is in possession of the goods it is his responsibility alone to ensure the goods do not irregularly find their way into home consumption. It is in this sense that he is bound to keep the goods safely and to account for them. That being so he may escape liability if he is still in possession of the goods or if he can account for them by showing that they did not pass into home consumption from his hands.'

Date of decision:  23 August 2001

Legislative References:
Excise Tariff Act 1921
   Section 5
   The Schedule

Excise Act 1901
   Subsection 4 (1)
   Part III
   Part IV
   Section 54
   Subsection 60 (1)
   Paragraph 60 (1) (a)
   Subsection 61 (1)

Case References:
Collector of Customs (N.S.W) v. Southern Shipping Co. Ltd
   (1962) 107 CLR 279

Excise duty
Excisable goods
Excise manufacturer
Storage place

Siebel/TDMS Reference Number:  Hypothetical

Business Line:  Indirect Tax

Date of publication:  19 November 2001

ISSN: 1445-2782