Excise guidelines for the fuel industry
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02 LICENSING: Applications
|OUR COMMITMENT TO YOU The information in this publication is current at August 2012. This publication is an expression of the Commissioner's opinion on the operation of fuel excise legislation. This publication is not legally or administratively binding on the Commissioner and is not a 'public ruling' for the purposes of Division 358 of Schedule 1 to the Taxation Administration Act 1953. If you feel this publication does not fully cover your circumstances, please seek help from the Tax Office or a professional adviser. Since we regularly revise our publications to take account of any changes to the law, you should make sure this edition is the latest. The easiest way to do this is by checking for a more recent version on our website at www.ato.gov.au|
2.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO LICENCES?
2.1 PURPOSEThis chapter deals with:
- why there is a licensing regime
- what a licence is
- different licence types
- what records need to be kept
- responsibilities of a licence holder
- how long a licence is valid for
- whether licences are transferable
- disclosure of your licensing information
- how to register for excise
- how to apply for a licence
- how to change your licence details, and
- penalties that can apply to offences in relation to licences.
2.2.1 WHY IS THERE A LICENSING REGIME?The excise duty attached to excisable fuel products forms a significant component of the overall value of the goods. A licensing regime reduces the risk that the correct amount of duty will not be paid.
2.2.2 WHAT IS A LICENCE?A licence is an approval or authorisation to enable you to undertake activities as specified in the licence. If you undertake these activities without a licence or contravene your licence you are committing an offence and may be prosecuted. A licence is issued to a specific entity and specifies the site or sites [8A] where the activities may be undertaken. This may require you to have more than one licence. Licences can be issued to:
- partnerships and companies in their own right, and
- individuals and companies in their capacity as trustees.
|A licence is not transferable.|
2.3 POLICY AND PRACTICE
2.3.1 DIFFERENT LICENCE TYPESThere are two licence types:
- Manufacturer, and
Manufacturer licenceTo manufacture excisable goods, the Excise Act requires you to be a licensed manufacturer  and that the goods be manufactured at licensed premises in accordance with the conditions specified on your manufacturer licence.  The term 'manufacture' is defined in section 4 of the Excise Act and includes all processes (that is, operations or actions) used in the manufacture of excisable goods. The definition in the Excise Act is an inclusive one, that is, it includes some processes that might otherwise not generally be considered as manufacture. However, the definition itself refers to the processes that are used in the manufacture of excisable goods. It is, therefore, relevant to examine the ordinary meaning of the word and determine its appropriateness for the purposes of the Excise Act. The courts have extensively examined the meaning of 'manufacture' in the context of legislation other than the Excise Act. Whilst it is not possible to directly adopt judicial interpretation of the word as it appears in other legislation, these cases do provide guidance. In summary, the courts have given the word 'manufacture' the meaning of either producing a thing which is different from its inputs, or bringing a new article into existence by skill or knowledge.  The courts considered processes that involved the application of knowledge, the application of skill, experience, services or labour which results in the conversion of materials into a saleable commodity may fall within the definition of 'manufacture'. The commodity must be different from the inputs which went into making it. In an excise context, the conversion may result in a change in physical and/or chemical properties of goods, for example, in colour, shape, density, viscosity, distillation temperature, composition, texture, aroma or taste.
|For more information on the Commissioner's view on manufacture for the purposes of the Excise Act refer to ER 2012/D1: Excise the meaning of the expression 'manufactured or produced' for the purposes of the Excise Acts .|
Exemptions from excise dutyLiquefied Petroleum Gas (LPG) and Liquefied Natural Gas (LNG) are exempt from excise duty when the fuel is used at the premises specified in a manufacturer licence in the process of manufacturing:
- petroleum condensate or stabilised crude petroleum oil; or
- liquefied petroleum gas, liquefied natural gas or other hydrocarbons.
- compressed other than in the course of carrying on an enterprise or
- compressed at residential premises in equipment that is not capable of compressing more than 10 kilograms per hour or an amount per hour specified in the regulations, and provided the CNG is not sold or otherwise supplied in the course of carrying on an enterprise.
Petroleum condensate or stabilised crude petroleum oil; Topped crude petroleum oil; Refined or semi-refined liquid petroleum products derived from petroleum; Liquid hydrocarbon products derived through recycling manufacturing or any other process; Denatured ethanol for use as fuel in an internal combustion engine; Biodiesel; or LPG, LNG or CNG.However certain blending of those products is excluded from being manufacture  . This is where:
- the blending is of goods that have all had duty (customs or excise) paid at the same rate 
- the product is covered by a determination made under subsection 95-5(1)  of the Fuel Tax Act 2006 
- the product is covered by a determination under 77H(4) of the Excise Act 1901 
- blends of one type of aviation fuel where excise or customs duty has been paid on all fuel components of the blend albeit at different rates
- blends of one type of gaseous fuel where excise or customs duty has been paid on all fuel components of the blend at different rates and no remission has applied to any of the fuel
- blends of LPG or LNG where a full or partial remission of excise or customs duty has been applied to any components of the fuel blend because it is intended for non-transport use only (that is, not for use in a motor vehicle or vessel). [17A]
|For more information on fuel blending refer to Chapter 12 - Fuel Blending.|
- crude oil and condensate production
- petroleum refining
- certain blending [17B]
- recycling [17C]
- biodiesel manufacture
- fuel ethanol manufacture
- production of LPG, LNG or CNG
- oil refining
- biodiesel manufacture, etc.
|Example 2A: Michaels Biofuels imports 10,000 litres of biodiesel which it intends to blend with diesel obtained underbond from a local refiner to produce a B20 blend to be sold into the Australian marketplace. Michaels Biofuels has a customs warehouse licence for the facility where the biodiesel will be stored. Michaels Biofuels also has an excise manufacturer licence for the same facility. The biodiesel is entered with the Customs for warehousing at the time it is imported. Michaels Biofuels blends the 10,000 litres of biodiesel with 40,000 litres of locally manufactured diesel and reports the 10,000 litres of biodiesel used in the blend to Customs. Michaels Biofuels delivers the 50,000 litres of B20 blend into the Australian domestic market in accordance with their periodic settlement permission and pays the excise duty of 50,000 x $0.38143 = $19,071.50.|
Storage licenceIf you have a manufacturer licence and wish to store your excisable fuel products underbond at a place that is not specified in your licence you will require a separate storage licence for that place. If you are in the business of wholesaling and distribution you may wish to store underbond excisable fuel products (whether owned by you or someone else). In either case you would require a storage licence. Even if you are not the owner of the excisable fuel products, you are still responsible for the security of the goods and may be liable to pay an amount equivalent to the duty if the excisable goods are not kept safely or are not satisfactorily accounted for. A storage licence will specify the type of excisable fuel products and the location. It will also specify the activities, if any, you can undertake in relation to those goods, and whose excisable goods you can store,  for example:
- goods you own
- goods owned by certain people
- storage of underbond product, and
- packaging (in bottles, tins, drums).
|If you hold a valid manufacturer licence, you do not need a separate storage licence to store goods that you manufacture at those premises. The storage of your manufactured goods, whilst not manufacture in itself, is a normal part of the chain of events in manufacturing goods. It does not, however, include storing excisable goods manufactured by someone else. To store goods manufactured by someone else you will need a storage licence.|
2.3.2 WHAT ARE MY RESPONSIBILITIES AS A LICENCE HOLDER?You are responsible for the secure storage of all excisable fuel products held on your premises or under your control and must keep or store excisable fuel products only at premises that are specified in your licence.  You may be responsible for paying an amount equal to the excise duty that would have been payable on any stolen, missing or unaccounted for excisable fuel products.  Where, after we take stock of excisable fuel products manufactured, and the materials you use in the manufacturing process, it appears to us that not all the duty that should have been paid has been paid, you must pay the difference between the amount paid and the amount that should have been paid. 
|If you wish to destroy any excisable fuel products you must first obtain permission from us to do so.|
|For more information about obtaining permission to move excisable fuel products refer to Chapter 5 - Movement permissions.|
- ensure excisable fuel products are only delivered into the Australian domestic market with appropriate authority, such as in accordance with a periodic settlement permission or Delivery authority 
- pay the correct amount of excise duty 
- provide all reasonable facilities to enable us to exercise our powers under the Excise Act,  and
- provide sufficient lights, correct weights and scales, and all labour necessary for
- weighing material received into your factory
- weighing all excisable goods manufactured in your factory, and
- taking stock of all material and excisable goods contained in your factory. 
- ensure excisable fuel products are only delivered into the Australian domestic market with appropriate authority, such as in accordance with a periodic settlement permission or Delivery authority,  and
- pay the correct amount of excise duty  if you are the owner or manufacturer.
|For more information about duty liability and methods of payment refer to Chapter 6 - Payment of duty .|
2.3.3 WHAT ELSE CAN WE DO?Access We have the right to enter your licensed premises at any time and can examine and take account of all the goods at the premises.  Note: we will usually only seek to enter your premises during normal business hours. Stop vehicles We can stop any vehicle leaving your licensed premises and check that there is proper documentation for excisable fuel products leaving the premises. We can question the driver about any goods in the vehicle. We can direct that the vehicle be unloaded and goods taken to particular parts of the premises for further examination. We must not detain a vehicle for longer than is necessary to do the checking.  Search vehicles We can stop and search any vehicle (not just vehicles leaving a licensed premises) without a warrant if we have reasonable grounds for believing that the vehicle contains excisable fuel products and that the vehicle has been used, is being used or will be used in the commission of an offence under the Excise Act (and certain offences in the Crimes Act 1914  and Criminal Code  relating to accessory after the fact, attempt to commit an offence, aid and abet someone to commit an offence and conspiracy to commit an offence).  Examine goods We can open packages and examine, weigh, mark and seal any excisable fuel products that are subject to excise control and, if you are a manufacturer, lock up, seal, mark or fasten any plant in or on your factory.  We can also:
- supervise the manufacture of excisable fuel products,  and
- take samples of materials, partly manufactured excisable fuel products and excisable fuel products subject to excise control, and fuel products that we have reasonable grounds for suspecting are excisable fuel products on which duty has not been paid. 
2.3.4 WHAT RECORDS DO I NEED TO KEEP?Unlike other taxation laws the Excise Act does not have a general record keeping provision. The Excise Act does provide that a licence holder shall:
- keep such records and furnish such returns as directed
- keep these records for the period directed, and
- on demand, produce those records to us. 
2.3.5 HOW LONG IS MY LICENCE VALID FOR?Your licence will state its expiry date. When first issued, the licence is valid until the next 30 September two years after the anniversary of the day it is granted. 
|Example 2B: If we grant a licence on 15 September 2007, it will expire on 30 September 2009. If we grant a licence on 15 October 2007, it will expire on 30 September 2010.|
2.3.6 IS MY LICENCE TRANSFERABLE?Generally you cannot transfer your licence to another individual, business entity or premises. The proposed new licence holder must apply for a new licence. You must also request cancellation of your current licence if you are no longer carrying out an excise activity. It is important that you advise us of any change in advance of it taking effect. The exception to the above rule arises when a licence holder dies. If this is the case, the licence is taken to be transferred to the person's legal personal representative. This allows for the finalisation of the affairs and, unless cancelled earlier, the licence is taken to be automatically cancelled 3 months after the licence holder dies. 
|For more information about cancelling licences refer to Chapter 4 - Licensing: Suspension & cancellation .|
2.3.7 CAN MY LICENSING INFORMATION BE DISCLOSED?As well as the protection provided by the Privacy Act, the tax laws have secrecy provisions about using and disclosing taxpayer information. We can only look at, record, discuss or disclose information about you when it is a necessary part of our work, or where the law specifies that we may. Section 355-50 Taxation Administration Act 1953 allows us to record or disclose information about you in the performance of our duties. We also may disclose information where the disclosure is for the purpose of enabling the person to understand or comply with their obligations under the Excise laws.
|Example 2C Raul is licensed under the Excise Act to manufacture spirits. Tim has an approval issued under the Excise Act to use spirits for fortifying Australian wine. Tim wants to buy 1,000 litres of spirit from Raul. Raul contacts us to check that Tim's approval allows for 1,000 litres of spirit and that it is still current. We are permitted to divulge details of Tim's approval to Raul to allow Raul to fulfil his obligations under the Excise Act.|
|Example 2D You need to find additional storage space for your finished fuel products and, therefore, need to check that the entity who offers to warehouse your products has a licence to store excisable fuel products.|
|For information about your review rights refer to Chapter 8 - Reviews and objections .|
2.4.1 HOW DO I REGISTER FOR EXCISE?You must register for excise before you can be issued with a licence to store or manufacture excisable fuel products. While it is not compulsory to provide an ABN or TFN for registration, it will help us to process your application. If you need an ABN, phone 1300 657 162 for a registration pack. You can send your completed ABN registration form with your completed excise registration application.
|To register for excise, complete an Application for excise registration (NAT 7103).|
2.4.2 HOW DO I APPLY FOR A LICENCE?If you would like to apply for a licence, you should:
- contact us, and
- lodge an application form together with all the required supporting documents.
- discuss your particular circumstances with you
- give you advice about the appropriate licence or licences
- explain how to apply
- explain your ongoing obligations as a licence holder, and
- provide you with a licence application form.
|There is no charge for an excise licence.|
How do I lodge an application?You need to complete the relevant form to apply for a manufacturer or storage licence.  Before lodging your application form, make sure you have included the required supporting documents. Your application form contains information to help you work out which supporting documents you must provide. You may also need to complete other excise forms, depending upon your proposed activities. Supporting documents include:
- an accurate plan of the premises that clearly indicates the area for manufacture or storage
- a Consent to obtain information - individual (NAT 7112) form, or
- a Consent to obtain information - company (NAT 7106) form
- a Consent to criminal history record check (NAT 16358), and
- an application for permission to move underbond goods.
|For more information about movement permissions refer to Chapter 5 - Movement permissions .|
|You should contact our Licensing staff on 1300 137 292 for advice about the forms and supporting documents that you will need to lodge.|
- fax them to us on (03) 9285 1168 , or
- post them to
Excise Licensing Group
Australian Taxation Office
PO Box 3001
PENRITH NSW 2740
|You must not manufacture or store excisable goods before your licence has been granted.|
|We will ordinarily respond to written information requests within 28 days. If we cannot respond within 28 days, we will contact you within 14 days to obtain more information or negotiate an extended response date.|
2.4.3 HOW DO I CHANGE MY LICENCE DETAILS?We can amend your licence for changes that do not involve a change of entity or physical location. This includes a change of:
- business name (that is your trading name)
- postal address, or
- street name or property address made by a relevant authority.
2.4.4 WHAT DO I DO IF I NEED MORE INFORMATION?If you need more information on licensing matters contact us as follows:
- phone 1300 137 292
- fax (03) 9285 1168 , or
- write to us at
Australian Taxation Office
PO Box 3001
PENRITH NSW 2740
2.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO LICENCES?The following are the penalties that may apply after conviction for an offence. Manufacture If you manufacture excisable fuel products without a manufacturer licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.  [47A] If you manufacture excisable fuel products contrary to the Excise Act or any conditions specified in your licence, the penalty is a maximum of two years in prison or 500 penalty units.  If you manufacture excisable fuel products at premises that are not specified in your licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.  Keep or store If you possess or have custody or control of excisable fuel products without permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable fuel products.  False or misleading statements If you make a false or misleading statement, or an omission from a statement in respect of duty payable on particular goods, to us, a penalty not exceeding the sum of 50 penalty units and twice the amount of duty payable on those goods.  Records If you do not keep, retain and produce records in accordance with a direction under section 50 of the Excise Act, the penalty is a maximum of 30 penalty units. Directions If you do not comply with a direction in regard to what parts of the factory can be used for various matters, the penalty is a maximum of 10 penalty units.  Facilities etc. If you do not provide all reasonable facilities for enabling us to exercise our powers under the Excise Act, the penalty is a maximum of 10 penalty units.  If you do not provide sufficient lights, correct weights and scales, and all labour necessary for weighing material received into, and all excisable fuel products manufactured in, your factory and for taking stock of all material and excisable fuel products contained in your factory, the maximum penalty is 10 penalty units.  Marks and seals If we mark or seal excisable fuel products or fasten, lock or seal any plant in your factory and you alter, open, break or erase the mark, seal, fastening or lock, the maximum penalty is 50 penalty units. 
2.6 TERMS USEDExcisable fuel products Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are manufactured or produced in Australia and listed in the Schedule to the Excise Tariff Act. As these guidelines deal with fuel products, we have used the term excisable fuel products. Excisable fuel products include:
- renewable diesel
- crude petroleum oil
- heating oil
- fuel ethanol
- compressed natural gas (CNG)
- liquefied natural gas (LNG), and
- liquefied petroleum gas (CNG).
2.7 LEGISLATION (quick reference guide)In this chapter we have referred to the following legislation:
2.7.1 Excise Act 1901Section 4 - Definitions Section 6A - How this Act applies to partnerships Section 24 - Excisable goods and goods liable to duties of Customs may be used in manufacturing excisable goods Part III Division 1 - Manufacturers Section 25 - Only licensed manufacturers to manufacture excisable goods Section 26 - Licensed manufacturers to manufacture in accordance with Act and licence Section 27 - Licensed manufacturers to manufacture only at licensed premises Section 39 - Applications for licences Section 39E - Duration of licences Section 39O - Death of licence holder Section 46 - Supervision by officers Section 49 - Facilities to officers Section 50 - Record keeping Section 51 - Collector may give directions Section 52 - Weights and scales Section 53 - Responsibility of manufacturers Section 54 - Liability to pay duty Section 58 - Entry for home consumption etc. Section 60 - Persons to keep excisable goods safely etc. Section 61A - Permission to remove goods that are subject to CEO's control Section 61C - Permission to deliver certain goods for home consumption without entry Section 62 - Deficiency in duty Section 77G - Fuel blending is to be treated as manufacture Section 77H - Blending exemptions Section 77HA - Compresses natural gas that is exempt from excise duty Section 77HB - Liquefied petroleum gas and liquefied natural gas that is exempt from excise duty Section 86 - Officers to have access to factories and approved places Section 87 - Power to stop conveyances about to leave an excise place Section 87AA - Searches of conveyances without warrant Section 91 - Examine all goods Section 92 - Seals etc. not to be broken Section 106 - Samples Section 117 - Unlawful possession of excisable goods Section 120 - Offences Section 159 - Protection of confidentiality of information
2.7.2 Excise Tariff Act 1921The Schedule
2.7.3 Customs Act 1901Section 105B - Extinguishment of duty on excise-equivalent goods
2.7.4 Crimes Act 1914Section 4AA - Penalty units Section 6 - Accessory after the fact
2.7.5 Criminal Code Act 199511.1 - Attempt 11.2 - Complicity and common purpose 11.5 - Conspiracy
2.7.6 Taxation Administration Act 1953Section 355-50 - Exception - disclosure in performing duties
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