ATO Interpretative Decision
ATO ID 2004/61
ExciseExcise: goods given away without payment of excise duty
FOI status: may be released
Status of this decision: Decision Current
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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.
Has a licensee who has given away excisable goods for promotional purposes, without payment of excise duty on those goods, accounted for those goods to the satisfaction of a Collector as required by subsection 60(1) of the Excise Act 1901?
No. A licensee who has given away excisable goods, without payment of excise duty on those goods, has not accounted for those goods to the satisfaction of a Collector as required by subsection 60(1) of the Excise Act.
Excisable goods were manufactured by a licensed manufacturer and were subject to the control of the CEO.
Excise duty was not paid on the goods.
A Collector requested the licensee to account for the goods.
The licensee explained that the goods were given away for promotional purposes.
Reasons for Decision
Section 5 of the Excise Tariff Act 1921 (Tariff Act) imposes duties of excise on the goods which are specified in The Schedule to the Tariff Act.
Section 54 of the Excise Act requires the manufacturer or the owner of excisable goods to pay the excise duty on those goods when the goods are entered for home consumption.
Subsection 60(1) of the Excise Act states:
Where a person (including a licensed manufacturer) who has, or has been entrusted with, the possession, custody or control of excisable goods which are subject to the CEO's control:
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.
The licensee has explained that the goods were given away to prospective customers to gain sales. The issue at hand is whether the licensee has accounted for the goods to the satisfaction of a Collector. If not, the licensee is liable to pay an amount equal to the Excise duty which would have been payable on those goods.
The purpose of section 60 of the Excise Act was examined in Collector of Customs (NSW) v. Southern Shipping Co Ltd (1962) 107 CLR 279. The case predates the Commissioner of Taxation assuming responsibility for Excise matters. The principles outlined in the case remain valid but references to 'Customs control' should be read as 'the CEO's control'. Dixon CJ stated '... on a complete view of s.60 it seems rather to be a provision for the protection of the revenue ...' Menzies J, in discussing subsection 60(1) stated:
... the account of the goods that is required is an account which shows an authorized relinquishment of possession, custody and control or, despite an unauthorized loss of possession, custody and control, that the goods have not got into home consumption without the payment of duty or that, notwithstanding the failure to keep the goods safely, Customs control over them is still effective.
Finkelstein J in Sidebottom v. Guiliano (2000) 98 FCR 579 stated:
The object of s60 is to impose an obligation upon a person in possession, custody or control of excisable goods to ensure that those goods do not find their way into home consumption without the payment of duty.
As may be seen from the above information, the object of section 60 is to ensure that excisable goods do not leave the CEO's control until they have been properly accounted for. Where goods have gone into home consumption, proper accounting requires the making of an Excise Return for removal of the goods for home consumption and the payment of the appropriate excise duty.
As the licensee has allowed the goods to leave the CEO's control without payment of the appropriate amount of excise duty, the goods have not been properly accounted for to the satisfaction of a Collector.Date of decision: 14 January 2004
Sidebottom v. Giuliano
(2000) 98 FCR 579
107 CLR 279
Section 60 excise demands