ATO Interpretative Decision
ATO ID 2014/13
Excise
Excise: Blended fuel - used, contaminated fuel and diesel-
With effect from 1 July 2015, the term 'Australia' is replaced in nearly all instances within the Fuel Tax legislation with the term 'indirect tax zone' by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015. The scope of the new term, however, remains the same as the repealed definition of 'Australia' used in those Acts.This document has changed over time. View its history.
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Are there any amounts of duty to be subtracted from the total duty to be paid for the purposes of section 6G of the Excise Tariff Act 1921, in relation to a constituent element of a blend where the constituent element has had duty paid, is used and becomes contaminated through use and is then blended with diesel?
Decision
No. There are no amounts of duty to be subtracted from the total duty to be paid for the purposes of section 6G of the Excise Tariff Act. In this case, any duty that was paid on the fuel before it was used and contaminated is not relevant for the purposes of section 6G.
Facts
An entity acquires duty paid fuel classified to sub-item 10.28 of the Schedule to the Excise Tariff Act for use as a solvent. The solvent is used for the cleaning of engine parts.
As a result of its use as a solvent, the fuel is contaminated with dirt and particulates. The used solvent is collected and stored in a small tank.
The entity subjects the contaminated solvent to a process to remove all dirt and particulates. The process requires the contaminated solvent to pass through a filtration system in a continuous cycle.
The resultant product is not for use as a solvent.
Duty is not paid on the used solvent product.
The used solvent is then blended with diesel fuel, on which duty has not been paid, to produce a fuel which is suitable for use in diesel powered vehicles and which is classified to sub-item 10.30 of the Schedule to the Excise Tariff Act.
Reasons for Decision
Section 6G of the Excise Tariff Act provides the method for working out the duty payable on certain fuel blends specified in item 10 of the Schedule to the Excise Tariff Act as follows:
Method statement
| Step 1 | Add up the amount of duty that would be payable on each constituent of the blended goods, that is classified to item 10 of the Schedule, if the constituent had not been included in the blended goods. |
| Step 2 | Work out the volume, in litres, of the blended goods that is not attributable to those constituents or to water added to manufacture the blended goods. |
| Step 3
Note: |
Multiply the result of step 2 by $0.38143.
The rate set out in this step is indexed under section 6A of the Excise Tariff Act. |
| Step 4 | Total the results of steps 1 and 3. |
| Step 5 | Subtract from the total any duty paid on a constituent of the blended goods that is classified to item 10 or 15 of the Schedule. |
(2) If a constituent of the blended goods was imported, assume for the purposes of method statement that:
- (a)
- the constituent was manufactured in Australia when it was imported; and
- (b)
- if customs duty was paid on the constituent, there was a payment of excise duty equal to the lesser of the following amounts (or either of them if they are equal):
- (i)
- the amount of excise duty that would have been payable on the constituent had it been manufactured in Australia when it was imported;
- (ii)
- the amount of the customs duty paid.
The effect of section 6G of the Excise Tariff Act is that the entire volume of the blend is subject to a rate of duty of $0.38143 per litre, however, subtracted from the amount of duty payable is any duty that has been previously paid on any of the constituents of the blend. In this case the constituent elements of the blend are diesel and used solvent.
To be determined is whether any of the duty previously paid on the solvent when it was originally delivered, is an amount of duty to be subtracted from the total duty to be paid on the blended goods.
The Commissioner's view is that the solvent which was originally delivered is not the constituent element of the blend. The constituent element is the used solvent product.
As the used solvent has not had any duty paid on it there is no amount of duty to be subtracted from the total duty to be paid on the blended product for the purposes of section 6G of the Excise Tariff Act.
Amendment History
| Date of Amendment | Part | Comment |
|---|---|---|
| 25 January 2019 | Reasons for Decision | Included a note to section 6G of the Excise Tariff Act 1921 |
Legislative References:
Excise Tariff Act 1921
section 6G
item 10 of the Schedule
subitem 10.28 of the Schedule
ATO ID 2008/165 (withdrawn)
Keywords
Excise
Fuel
Date reviewed: 21 January 2019
ISSN: 1445-2782
| Date: | Version: | |
| 8 April 2014 | Original statement | |
| You are here | 25 January 2019 | Updated statement |