• The impact of this case on ATO policy is discussed in Decision Impact Statement: Sogo Duty Free Pty Ltd v Commissioner of Taxation (Published 22 June 2011).

SOGO DUTY FREE PTY LTD v FC of T

Judges:
Ryan J
Jessup J
Perram J

Court:
Full Federal Court, Melbourne

MEDIA NEUTRAL CITATION: [2011] FCAFC 36

Judgment date: 16 March 2011

---

Ryan, Jessup and Perram JJ

The court:

1. This is an appeal from orders made by a single Judge of the Court on an application by way of appeal from a decision of the Administrative Appeals Tribunal ("the Tribunal") made on three applications by the appellant in relation to decisions of the respondent ("the Commissioner"). The two applications which were relevant to the proceedings at first instance in this Court were described by the Tribunal at [2] of its reasons for decision as follows;

• • VT200300211-213, relating to a decision by the Respondent that the Applicant had understated its income for the financial years 1999, 2000 and 2001. This was as a result of purporting to sell duty-free cigarettes to crews of visiting ships in circumstances where the crew sales invoices were shams (the income tax application);
• • 2009/1459, relating to a decision by the Respondent to demand payment of excise duty on the basis that the Applicant had breached the applicable conditions of its Permission to sell goods duty free, meaning that the goods were deemed to have been sold for home consumption (the excise application).

Those decisions were based on a conclusion by the Commissioner that sales, which the appellant had claimed to have made duty free to crews of ships visiting Melbourne, had not been made as claimed in invoices on which the appellant relied but had been sales made for domestic consumption to persons unknown. One result of that conclusion was that the appellant had understated its income for the purposes of Div 6 of the Income Tax Assessment Act 1997 (Cth) ("the 1997 Act"). The Commissioner calculated the amount of the understatement by applying "a recommended wholesale price to the quantities of cigarettes purported to have been crew sales in the relevant month." That imputed wholesale price was derived from a list of prices appearing in a publication called "The Australian Retail Tobacconist".

2. The Commissioner's assessment was predicated on the view that the transactions purportedly recorded in the appellant's invoices for the period from 11 April 1999 to 24 May 2001 had been shams and that the cigarettes had been sold duty free in circumstances where the appellant knew, or should have known, that they had been intended, or might reasonably have been intended, for domestic consumption. The appellant, on the other hand, contended before the Tribunal that the invoices "reflected bona fide sales of cigarettes which had been sold in good faith to persons unknown for the purpose of export and had not been sold on the domestic market."

3. During the relevant period, the appellant sold 46,017,670 single cigarettes purchased in cartons. The appellant also contended before the Tribunal that the income which it had derived from the gross sales of the cigarettes had been included in its assessable income for the relevant tax years.

4. The Tribunal characterised the appellant's evidence as "less than convincing" and "unreliable" and held that it did not discharge the onus of proof imposed on the appellant by s 14ZZK of the Taxation Administration Act 1953 (Cth) ("the Administration Act"). The appellant also failed in its attack before the Tribunal on the Commissioner's decision to which the excise application had been directed. The undisputed facts which the learned primary Judge regarded as relevant to the excise application have been summarised as follows by her Honour;

• "15. The Applicant, a holder of a Warehouse Licence and a Permission granted under the Excise Act, was authorised to operate an outwards duty free shop within the meaning of s 61D of the Excise Act and s 96A(2) of the Customs Act 1901 (Cth). That Permission contained a number of conditions, including, inter alia:
  • 1. that the Permission was for delivery of goods to the relevant traveller for export personally by the traveller when making the international flight or voyage and the exportation of those goods by the relevant traveller when making that international flight or voyage, without the goods having being entered for export;
  • 2. a 'Delivery Condition' which provided that the Applicant had to deliver the goods in a sealed package to the relevant traveller on board the ship not more than 24 hours before the departure time of the ship and obtain a signed acknowledgement stamped with the vessel's name from a ship's officer for the goods received on board; and
  • 3. a 'Proof Condition' incorporated by reference to s 61D(10) of the Excise Act which provided that the Applicant had to provide the Commissioner with proof, in a prescribed way and within a prescribed time, of the export of goods delivered to a relevant traveller in accordance with the Permission.
• 16. On 30 September 2008, the Commissioner issued a demand under s 60 of the Excise Act for $11,732,276.94 (that amount was later reduced to $11,711,497.02). On 27 November 2008, the Applicant objected to the demand. On 23 March 2009, the Commissioner disallowed the Applicant's objection in full for the relevant period."

5. The Tribunal, in relation to the excise application, found that the cigarettes had not been sold for export but had been delivered into home consumption so that excise duty became payable by the appellant. The Tribunal further concluded that the appellant had failed to discharge the obligation imposed on it by s 60 of the Excise Act 1901 (Cth) ("the Excise Act") to keep the cigarettes safely. The Tribunal explained in these terms its reasons for that conclusion;

• "[118] In relation to the excise claim, it follows from the Tribunal's findings of fact that the Applicant is liable to pay the Respondent's demand. It is the Tribunal's conclusion that the goods were not sold for export but were delivered into home consumption, thus rendering the Applicant liable to pay excise duty on each stick in the manner submitted by the Respondent. By delivering the goods into home consumption, the Applicant failed to keep the goods safely within the meaning of section 60 of the Excise Act.
• [119] The object of section 60 is to ensure that excisable goods do not find their way into home consumption without the payment of duty:
  Sidebottom v Giuliano (2000) 98 FCR 579. The Applicant had an obligation to keep the goods safe from loss or destruction:
  Collector of Customs (NSW) v Southern Shipping Co Ltd (1962) 107 CLR 279. The Applicant failed to meet these fundamental obligations. The Applicant rarely, if at all, exhibited any concern as to whether goods leaving its shop had been entrusted to genuine representatives of ships' crews or whether the goods ultimately found their way onto a ship purportedly in port in Victoria at the time. The Applicant quite clearly contravened the Delivery Condition and failed to satisfy the Proof Condition which formed the basis upon which he had been entrusted the possession of the goods. Therefore the goods must be deemed to have been entered and delivered for home consumption, rendering the Applicant liable to pay excise duty on those goods."

6. The learned primary Judge dismissed the application by way of appeal from that part of the Tribunal's decision which upheld the Commissioner's assessment of the appellant to income tax. That part of her Honour's order is not the subject of any of the grounds of appeal comprised in the notice of appeal to this Full Court. The evidence and the reasoning of the Tribunal and her Honour which was directed to the income tax application is canvassed in these reasons only to the extent that those matters are relevant to her Honour's affirmation of the Commissioner's decision which was challenged by the excise application.

The application of the Excise Act

7. The learned primary Judge first noted that it was not disputed that the cigarettes sold by the appellant from its duty free store were "excisable goods" as defined in s 4 of the Excise Act. Section 54(1) of the Excise Act provides;

"The licensed manufacturer of excisable goods, or, where the owner of excisable goods enters them for home consumption, the owner of the goods, shall pay to the Collector, in accordance with this Act, the Excise duty on those goods."

8. Section 58 of the Excise Act contemplates that, instead of being entered for home consumption, excisable goods may be delivered for exportation. Thus, sub-s 58(1) and 58(1B) provide;

• "(1) Subject to subsections (2) and (4), entries may be made by the licensed manufacturer or owner and passed by an officer and may authorize the removal of excisable goods for:
  • (a) Home consumption.
  • (b) Removal to an approved place that is an approved place in relation to goods of all kinds or in relation to goods of the kind that are to be entered.

  … …

• (1B) Where it is intended to export excisable goods, the exportation of those goods must be dealt with under Part VI of the Customs Act 1901, but the granting of an authority to deal with those goods under section 114C of that Act does not affect the CEO's control over those goods in accordance with section 61 of this Act."

9. By s 59 of the Excise Act, excise duty on excisable goods must be paid at the rate in force either when the goods are delivered into home consumption under s 61C(2) or when payment is made, whichever is the earlier. So far as is relevant, s 60 of the Excise Act provides;

• "(1) Where a person … who has, or has been entrusted with, the possession, custody or control of excisable goods which are subject to the CEO's control:
  • (a) fails to keep those goods safely; or
  • (b) 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.

  … …

• (4) This section does not affect the liability of a person arising or by virtue of:
  • (a) any other provision of this Act; or
  • (b) a security given under this Act.

'CEO' is defined in s 4 of the Excise Act as meaning 'the Commissioner of Taxation'."

10. Section 61(1) of the Excise Act, in turn, provides;

"All excisable goods are subject to the CEO's control until delivered for home consumption or for exportation to a place outside Australia, whichever occurs first."

11. Section 61AA provides for delivery for exportation of excisable goods by stipulating:

• "(1) For the purposes of this Act, excisable goods, other than goods delivered to a person under section 61D(2), are not taken to have been delivered for exportation until they are brought into a place that is a prescribed place for the purposes of paragraph 30(1)(d) of the Customs Act 1901 for export.
• (2) For the purposes of this Act excisable goods delivered to a person under subsection 61D(2) are taken to have been delivered for exportation at the time when they are received by that person."

12. In the present case, the Commissioner decided to demand payment by the appellant of an amount equal to the excise duty which would have been payable on the cigarettes if they had been entered for home consumption on the day of the demand. That decision was affirmed by the Tribunal and its affirmation was attacked at first instance in this Court on the ground that s 61D of the Excise Act precludes s 60 from attaching liability to the proprietor of an outwards duty free shop so that, in the circumstances, it was not open to the Tribunal to affirm the Commissioner's decision to make a demand for payment pursuant to s 60. Section 61D, so far as is relevant, provides;

• "(1) In this section:

  … …

  'outwards duty free shop' means a warehouse in respect of which the relevant warehouse licence authorises the sale in the warehouse of goods to relevant travellers.

  'proprietor' , in relation to an outwards duty free shop, means the holder of the warehouse licence that relates to the outwards duty free shop.

  'relevant traveller' means a person:

  • (a) who intends to make an international flight, whether as a passenger on, or as a pilot or member of the crew of, an aircraft; or
  • (b) who intends to make an international voyage, whether as a passenger on, or as the master or a member of the crew of, a ship.

  'warehouse licence' has the same meaning as it has in the Customs Act 1901.

• (2) Subject to the regulations (if any), a Collector may give permission, in accordance with subsection (3), for excisable goods that are specified in the permission, are subject to the CEO's control and are sold to a relevant traveller in an outwards duty free shop that is specified in the permission to be:
  • (a) delivered to the relevant traveller personally for exportation by him or her when making the international flight or voyage in relation to which he or she is a relevant traveller; and
  • (b) exported by the relevant traveller when making that flight or voyage without the goods having been entered for exportation;

  and, subject to subsection (13), the permission is authority for such goods to be so delivered and so exported.

  …

• (10) A permission under subsection (2) is subject to:
  • (a) the condition that the proprietor of the outwards duty free shop to which the permission relates will ensure that relevant travellers to whom goods are delivered in accordance with the permission are aware of any conditions of the permission with which they are required to comply; and
  • (b) the condition that that proprietor will provide a Collector with proof, in a prescribed way and within a prescribed time, of the export of goods delivered to a relevant traveller in accordance with the permission.

  …

• (12) Where the proprietor of an outwards duty free shop to which a permission under subsection (2) relates does not produce the proof required by paragraph (10)(b) that goods delivered by him or her to a relevant traveller in accordance with the permission have been exported by that traveller, the goods shall be deemed to have been entered, and delivered, for home consumption by the proprietor, as owner of the goods, on the day on which the goods were delivered to that traveller.

  …

  "

13. Before the learned primary Judge, the appellant contended that s 61D constituted an exclusive code governing the circumstances in which a proprietor of an outward bound duty free store could be assessed in respect of goods for which permission had been granted under that section. It, therefore, so the argument went, precluded the making of a demand under s 60 in respect of the same goods. As summarised by the learned primary Judge at [38] of her reasons, the appellant's submissions to this effect were as follows;

• "1. The legal effect of an application of s 61D(12) is different to the legal effect of an application of s 60(1), as the former imposes excise duty on actual goods whereas the latter 'creates a debt due to the Commonwealth equal to forgone duty';
• 2. Section 61D is limited in its application to proprietors of duty free shops, holding relevant permissions under the section;
• 3. The requirements in s 61D are more strict than s 60;
• 4. Section 61D and s 60 operate at different points - s 61D from the day of delivery, s 60 from the date of demand; and
• 5. As s 60(2) expressly relates to permissions granted under s 61A, it is to be expected that s 60 would expressly refer to a permission under s 61D if it were intended to apply."

14. An alternative argument advanced on behalf of the appellant was that the Tribunal had "conflated" s 60 and s 61D by finding, at [118] of its reasons, that the cigarettes had been delivered for home consumption and, at [119] of its reasons, that they were deemed to have been delivered for home consumption. A further, separate, argument advanced in this context was that, irrespective of whether s 61D was a code, the conditions specified in s 61D were wholly independent of whether the cigarettes had been safely kept for the purposes of s 60.

15. The learned primary Judge rejected each of these arguments advanced on behalf of the appellant. The grounds of appeal from that rejection set out in the appellant's notice, but omitting those grounds which have been abandoned before the hearing of the appeal, are;

• "1. The learned trial Judge erred:
  • 1.1 in finding that the section 61D of the Excise Act was not an exclusive code for liability and payment of excise duty, by misconstruing the question before her, viz., whether s 61D was an exclusive code for the assessment of excise duty in respect of goods to the exclusion of any operation of s 60, in circumstances in which the applicant was a proprietor of an outbound duty free shop holding a permission under s 61D(2) in respect of those goods; and
  • 1.2 by finding that the conclusions of the Administrative Appeals Tribunal ('the Tribunal') did not conflate the operation and effect of s 60 and s 61D of the Excise Act.
• 2. The learned Trial Judge erred by failing to find that:
  • 2.1 section 61D of the Excise Act was an exclusive code for the assessment of duty in circumstances in which the applicant, as proprietor of an outbound duty free shop holding a permission under s 61D(2) of the Excise Act, was to be assessed to excise duty in respect of goods held subject to that permission, to the exclusion of any operation of s 60 in respect of those goods;
  • 2.2 the Tribunal conclusions in relation to s 60 and s 61D of the Excise Act conflated the operation and effect of those provisions;

  … …

  • 2.5 the Tribunal misdirected itself in construing s 60(1) of the Excise Act in finding that a deemed entry and delivery into home consumption of goods under s 61(12) constituted the goods not being held safely under s 60(1); and

  … …

• 3. The learned Trial Judge should have found that
  • 3.1 section 61D was an exclusive code for the circumstances in which the applicant, as a proprietor of an outbound duty free shop holding a permission under s 61D(2), was to be assessed to excise duty in respect of goods held subject to that permission, to the exclusion of any operation of s 60 in respect of those goods;
  • 3.2 that the Tribunal conclusions in relation to s 60 and s 61D of the Excise Act conflated the requirements of those provisions.

    … …

  • 3.5 the Tribunal misdirected itself in construing s 60(1) of the Excise Act in finding that a deemed entry and delivery into home consumption of the good under s 61D(12) constituted the goods not being held safely under s 60(1); … …"

Is s 61D a code so that circumstances to which it applies cannot attract the operation of s 60?

16. In support of the appeal to this Full Court, Counsel for the appellant argued that, where a proprietor of a duty free store fails to provide the requisite proof that goods have been delivered to a traveller in accordance with the permission, those goods are deemed to have been entered and delivered for home consumption by the proprietor as owner of the goods on the day on which the goods were delivered to that traveller: (s 60D(12)). We take it that, when they suggested in their written outline of submissions that "a debt under s 60(1) arises where the criteria in that section are not satisfied", Counsel for the appellant meant that the right of a Collector to make a demand for payment arises where there has been either a failure to keep the goods safely or a failure on request to account for the goods to the satisfaction of a Collector. That understanding of the sub-section is consistent with the object attributed to it by Finkelstein J in
Sidebottom v Giuliano (2000) 98 FCR 579 where his Honour observed at 584;

"The object of s 60 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. First, the custodian of excisable goods is required to keep them safe, and if he fails to do so then he is liable to pay an amount equal to the excise duty (s 60(1)(a)). Secondly, the Collector is authorised to request an accounting to discover whether or not there has been a breach of that obligation (s 60(1)(b)). If the 'undoubted fact' is that a person in possession, custody or control of excisable goods has failed to keep them safely no purpose would be served by an accounting. The Collector can immediately rely upon par (a) and has no need to resort to par (b) for the purpose of making a demand for an amount equal to the unpaid duty. In that circumstance, in my opinion, par (b) cannot be invoked, and the subsection should be read down to that extent. In my view, par (b) can be relied upon when there is doubt about the whereabouts of excisable goods, or doubt as regards whether they have been kept safely. In those cases it is for the person in possession, custody or control to satisfy the Collector that the goods have not gone into home consumption without payment of duty. His failure to do so will render him liable to pay the debt due to the Commonwealth."

17. See also
Collector of Customs (NSW) v Southern Shipping Co Ltd (1962) 107 CLR 279 where Dixon CJ pointed out, at 288;

"All [s 60] does is to make the liability under s 60 collateral and not substitutional for the liability which may have been incurred under other provisions. But on a complete view of s 60 it seems rather to be a provision for the protection of the revenue, not a primary imposition of taxation. The distinction between a sum of money which can be made recoverable as protection to the revenue and the actual imposition of tax may appear a fine one … It must be remembered that the conditions prescribed by s 60(1) involved factors which go to safekeeping and to possession, custody and control, and perhaps the movement of the goods from the manufacturer. It is not based on primary notions of liability to tax. It is a secondary liability and is based on the hypothesis that the tax is escaped. It is indeed an ancillary measure and not itself a tax."

18. The characterisation of s 60(1) as a measure for the collateral protection of the revenue does not entail that it is incapable of extending, in part, to circumstances which enliven the deeming provision in s 61D(12). The deeming provision does not call for the exercise of any power or discretion by the CEO or a Collector as a condition of the recovery of a debt. It simply provides that non-compliance by the proprietor of a duty free store with the proof requirement in s 61D(10)(b) will attract the same liability to pay excise as would have been attracted had their owner entered the goods for home consumption.

19. Counsel for the appellant acknowledged this effect of the legislation when they submitted that, upon the delivery for home consumption deemed by s 61D(12), excise becomes payable on the goods pursuant to s 54. However, it does not follow that in a case to which s 61D(12) may apply, a Collector is precluded from making a demand for a penalty pursuant to s 60(1).

20. One obvious reason for this conclusion which applies in the present case is that the Tribunal was unable to find that the cigarettes in question had been delivered at all to travellers in accordance with the permission held by the appellant. It was therefore impossible to fix a day of delivery to a traveller as the day on which the goods were deemed to have been entered and delivered for home consumption as contemplated by s 61D(12).

21. It may be accepted, as Counsel for the appellant contended, that s 60(1) of the Excise Act does not itself impose excise duty. However, neither does s 61D. The latter section simply deems an entry and delivery for home consumption to have occurred with a consequence that liability to pay duty at the rate indicated in s 54 is attracted by operation of s 54. Counsel for the appellant accepted that "a debt under s 60(1) arises where the criteria in that section are not satisfied. In the present case the relevant criterion is whether there was a failure to keep the goods safely."

22. It is true that the relevant enquiry for the purposes of s 60(1) is whether there has been a failure to keep the goods safely but that feature of the legislation argues against s 61D constituting a code governing all defaults by outward duty free shops in respect of excisable goods covered by applicable permissions. In our view, the relevant enquiry for the purposes of s 61D(12) is whether the proprietor has produced the requisite proof that goods delivered to a traveller in accordance with the permission have been exported by that traveller. That enquiry may overlap with the enquiry ordained by s 60(1) as to whether the goods have been kept safely but is not co-extensive with it.

23. For these reasons, we have concluded that s 61D does not constitute a code prescribing the only action which the CEO or a Collector may take in respect of excisable goods which have been in the possession, custody or control of the proprietor of an outward duty free shop. This conclusion is not inconsistent with the final point submitted under this head by Counsel for the appellant in their written submissions. That was that:

"… a failure to satisfy the criteria provided for by s 61D(12) does not necessarily result in a failure of the criteria for s 60(1). In particular, a factual finding of non-compliance with delivery and proof conditions does not mandate that goods the subject of the conditions were not kept safely."

24. In our view, that contention does not support the proposition that s 61D(12) constitutes a code governing defaults in respect of excisable goods which have been in the custody, possession or control of proprietors of outward duty free shops. If anything, Counsel's contention tends to support the point made at [20] of these reasons that the enquiry contemplated by s 60(1) as to whether the goods have been kept safely is logically anterior to that required by s 61D(12). The later enquiry is whether the proprietor of the duty free shop can prove that goods which have been delivered to a relevant traveller (and therefore kept safely to that point) have been exported by that traveller in accordance with the permission.

Did the Tribunal erroneously conflate s 60(1) of the Excise Act with s 61D(12)?

25. As refined in the course of oral argument on the hearing of the appeal, the appellant's contention on this question was, as we understood it, that the Tribunal had wrongly taken into account the operation of the deeming provision in s 61D(12) in deciding whether there had been a failure to keep the goods safely. The Commissioner had to establish such a failure in order to make a demand for discharge of the collateral liability imposed by s 60.

26. In this context, Counsel for the appellant contended that the learned primary Judge had erred in holding that the Tribunal had made two separate findings, namely that the goods had, in fact, been entered for home consumption and that the goods were deemed to have been entered for home consumption. Her Honour's observations to that effect, as set out at [48] of her reasons, were;

"Further, the Applicant's alternative submission that the Tribunal 'conflated' the requirements of s 60 and 61D is also incorrect. At paragraphs [118] and [119], the Tribunal made two separate findings. First, the Tribunal concluded (having rejected the Applicant's evidence) that the goods were not sold for export but were delivered into home consumption - that is sold domestically. As a result, the Tribunal concluded correctly that the Applicant was liable to pay excise duty on the goods, which it had not paid, and that the Applicant had failed to keep the goods safely for the purposes of s 60. Secondly, the Tribunal concluded that the Applicant had breached the Permission by failing to satisfy the Proof Condition and contravening the Delivery Condition. As a result, the Tribunal concluded correctly that the goods were deemed to have been entered and delivered for home consumption pursuant to s 61D(12). The factual conclusions were independent of each other and open to the Tribunal. The Tribunal's conclusions do not reveal any error and the Applicant's appeal must fail."

27. Counsel for the appellant contended that her Honour's analysis was defective because, on a fair reading of the Tribunal's reasons, it had stated a conclusion that the goods had been entered for home consumption and justified that conclusion by reference to the deeming provision in s 61D(12). That method of reasoning was said to flow from the Tribunal's having posed for itself the question "whether the [appellant] had complied with the conditions of its Warehouse Licence and Permission and, if not, the extent of its liability to pay excise duty." The Tribunal's finding that the delivery and proof conditions had not been satisfied, so the argument went, led to the conclusion that the goods were deemed to have been entered for home consumption.

28. To understand why the Tribunal made its findings of fact in the sequence which it did, it is necessary to have regard, first, to the Commissioner's demand which recited, in its first paragraph;

"Sogo Duty Free Pty Ltd (the company) owes the Excise Collector of the Australian Taxation Office, 2 Lonsdale Street, Melbourne (the creditor) the amount of $11,732,276.94, being the amount of the debt described in the Schedule."

The demand also referred to the fact that:

"Attached to this Statutory Demand is the Statement of Facts and Reasons of Robert Saville, a taxation officer who is authorised by the Commissioner of Taxation to exercise the powers and functions of the Collector for the purposes of section 60 of the Excise Act 1901, determining that the debt is due and payable by the company."

The attached Statement of Facts and Reasons included the following paragraphs;

• "(5) An audit was conducted by the Australian Taxation Office in February 2003 which included a review of the documents and records obtained under a search warrant executed by the Australian Customs Service. Those documents and records relate to sales of cigarettes to relevant travellers in the period 11 April 1999 to 24 May 2001.
• (6) The audit concluded that the relevant sales did not comply with the terms and conditions of the permissions and consequently the company was not authorised to sell the cigarettes as duty free goods.
• (7) The company did not pay excise duty to the Collector in relation to those sales. By dealing with excisable cigarettes in an unauthorised manner, the company failed in its statutory duty to keep the excisable goods safely.
• (8) The evidence given by Hoang Hai Chiem, sole director of the company, at proceedings before the County Court of Victoria between 21 January and 6 February 2008 established that the company did not deal with the excisable cigarettes in an authorised manner, having regard to the company's excise licence and associated permissions under the Excise Act.
• (9) As a result of the company's failure to keep the goods safely as required by paragraph 60(1)(a) of the Excise Act, the company is liable pursuant to section 60(1) of the Excise Act to pay to the Commissioner of Taxation, in accordance with the attached Statutory Demand, an amount equal to the amount of the excise duty which would have been payable on those goods. For the purposes of the calculation, the rate of duty is the rate which would have been payable on the goods if they had been entered into home consumption on the day on which the demand is made."

29. The terms of that demand made it clear that it was made pursuant to s 60(1) of the Excise Act on the basis of a failure to keep the goods safely. In the circumstances, that required the Tribunal, in reviewing the Commissioner's decision, to consider whether there were facts amounting to a failure to keep the goods safely which justified the making of the demand. Counsel for the appellant accepted that the appellant bore the onus of establishing facts which precluded the application of s 60. Nevertheless, they sought to impute error to the Tribunal by arguing that, in consequence of the form of the Commissioner's demand, it had been led to conflate, or run together, the requirements of different provisions of the Excise Act.

30. However, the explanation given at [118] and [119] of the Tribunal's reasons, which have been reproduced at [5] above, makes clear that the Tribunal concluded from the findings which it had made earlier in its reasons that, as her Honour said, the goods had, in fact, been delivered into home consumption and therefore had not been kept safely as contemplated by s 60(1). The Tribunal's general approach to its fact-finding task was outlined as follows at [106] of its reasons:

"Mr Chiem's evidence was integral to the Tribunal's decision in this matter. Under cross examination Mr Chiem was less than convincing in relation to a number of key aspects of the sale process and his description led the Tribunal to the conclusion that the process was, at best, inefficient and unreliable and, at worst, suggestive of a cynical if not calculated disregard for the destination of the goods sold. The Tribunal concluded that Mr Chiem's evidence was unreliable. It is possible that Mr Chiem was confused by some of the questions put to him under cross examination and it also appears to be the case that some of the inconsistencies in his various statements and sworn testimonies were semantic only. Taken in its totality, however, Mr Chiem did not assist the Applicant in discharging the requisite burden of proof in relation to each of the three applications."

31. That paragraph makes clear that the Tribunal considered that the appellant, through its principal, Mr Chiem, had failed to discharge the onus, which it bore under s 14ZZK of the Administration Act, of showing that it had kept the cigarettes safely up to the point where, as it claimed, it had sold them to travellers for export. One reason for that conclusion indicated in [106] itself was that the sales process had been inefficient and unreliable and in some respects "suggestive of a cynical if not calculated disregard for the destination of the goods sold." Other grounds advanced by the Tribunal for finding that the appellant had not discharged its onus included these indicated in succeeding paragraphs of the Tribunal's reasons:

• 1. (a) At [107] it was noted that the appellant had not identified any of the representatives of the alleged purchasers of the goods, none of whom was called to give evidence. Accordingly, the Tribunal was entitled to infer that the evidence of these "representatives" would not have assisted the appellant's case.
• 2. (b) At [108], the Tribunal noted that the appellant had failed to ensure that the goods were accompanied to the ship in each case and had thereby been in breach of the conditions specified in its permission.
• 3. (c) At [110] the Tribunal found that the appellant had been prepared to accept signatures on invoices which it knew were not those of the intended recipients of the goods. In a related way, it was found, at [111], that the quantities of cigarettes allegedly ordered by individual recipients were "so great as to be implausible to any reasonable person".
• 4. (d) The findings noted at (c) above led the Tribunal to conclude, at [111] and [112], that the invoices relied on by the appellant did not accurately record actual sales but had been created to disguise the sales of the cigarettes which had taken place and "solely for the purpose of completing the paperwork."

32. The statements of the Tribunal's reasons which we have summarised at [31] above amply demonstrate that it had addressed the correct question in reviewing the Commissioner's decision to make a demand under s 60. That was whether the appellant had established that it had kept the goods safely. Accordingly, we consider that the learned primary Judge was entirely correct when she said, at [48] of her reasons reproduced at [26] above, that "the Tribunal made two separate findings … that the goods were not sold for export but were delivered into home consumption - that is sold domestically … [and] that the goods were deemed to have been entered and delivered for home consumption pursuant to s 61D(12)."

33. In short, we have concluded that the last sentence at [118] of the Tribunal's reasons, reproduced at [5] above, means what it says, i.e., that the goods had not been kept safely but had been delivered into home consumption and not to travellers for export. We adopt this interpretation even without construing the Tribunal's reasons with the benevolence enjoined by the High Court in
Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259, at 271-2. Because Counsel for the appellant candidly conceded that, if the Tribunal effectively found that the goods had not been kept safely, the appeal must fail, that result follows from our interpretation of the Tribunal's reasons.

34. Counsel for the appellant also accepted that if, as we have held, the Tribunal did conduct an enquiry as to whether the goods had been kept safely, its decision on that issue could not have been vitiated by its having taken into account non-compliance with the conditions attached to the appellant's permission to sell goods duty free.

35. In light of our conclusion on the primary issue, it is unnecessary for us to consider whether a finding of non-compliance with the conditions of the permission would have been sufficient, in the absence of any other finding, to support a conclusion that the goods had not been kept safely. However, we note in passing that Counsel for the Commissioner accepted that, if recovery of duty occurs by means of a demand under s 60, the Commissioner would be estopped from seeking double recovery by invoking s 61D(12) in combination with s 54(1) and, in the proper administration of the Excise Act, would not do so.

Conclusion

36. For the reasons which we have explained, the appeal must be dismissed with costs.