ATO Interpretative Decision
ATO ID 2004/62
Excise
Excise: goods sold without payment of excise dutyFOI status: may be released
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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.
Issue
Has an entity accounted for excisable goods to the satisfaction of a Collector (as required by subsection 60(1) of the Excise Act 1901) if the entity provides evidence of their sale?
Decision
No. An entity has not accounted for excisable goods to the satisfaction of a Collector (as required by subsection 60(1) of the Excise Act) if the entity provides evidence of their sale.
Facts
An entity manufactures a range of beverages.
The entity has been paying wine tax on those beverages.
The entity has sold the beverages.
The Tax Office decided that the beverages were excisable beverages.
A demand under section 60 of the Excise Act was issued to the manufacturer.
Reasons for Decision
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.
In this instance, the entity has explained that the goods were sold. The entity has also provided documentary evidence confirming their sale.
The issue to be determined is whether the entity has accounted for those goods to the satisfaction of the Collector. If the entity has not properly accounted for the goods, the entity is liable to pay an amount equal to the excise duty.
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 was decided prior to the Commissioner of Taxation taking over responsibility for Excise matters. The principles outlined in the case remain valid but references to Customs control should be read as being references to 'the CEO's control'. Menzies J, in discussing subsection 60(1) stated:
... the safety with which the section is concerned is that the goods - subject as they are to the control of Customs - do not get out of Customs control into home consumption without the payment of duty; similarly, 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. Giuliano (2000) 98 FCR 579 described the object of section 60 as follows:
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.
The manufacturer of the excisable goods had possession of the goods from the time they were made until they were sold.
As can be seen from the above case extracts, the object of section 60 is to ensure that goods do not leave the CEO's control until they are properly accounted for. Proper accounting for goods that have entered home consumption requires the recording and payment of the requisite duty.
As the entity has allowed the goods to leave the CEO's control without payment of the requisite duty, the goods have not been properly accounted for, regardless of whether the entity can provide evidence of their sale.
Date of decision: 14 January 2004
Legislative References:
Excise Act 1901
subsection 60(1)
Case References:
Customs, Collector of (NSW) v. Southern Shipping Co Ltd
(1962) 107 CLR 279
(2000) 98 FCR 579
Keywords
Excise collections
Section 60 excise demands
ISSN: 1445-2782