Edited version of private ruling

Authorisation Number: 1011891226520

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Ruling

Subject: Product Stewardship (Oil) benefit and Drawback of Excise duty

Question 1:

Are you entitled to a product stewardship (oil) benefit (PSO benefit) for oil that is exported in manufactured units or, in large litre drums for end use by customers?

Answer:

No.

Question 2:

Are you entitled to a drawback on the excise duty paid on oil that is exported in manufactured units or, in large drums for end use by customers?

Answer

Yes.

Question 3:

Is a claim available for drawback of excise duty paid in respect of goods that have been exported and provided later than 12 months after the day on which the goods are exported?

Answer:

No.

This ruling applies for the following period

2008-09 income year

2009-10 income year

2010-11 income year

The scheme commenced on

1 July 2008

Relevant facts

You export manufactured units and components.

You purchase oil for incorporation into these units and components.

You have stated that the oil has been subject to an excise duty of $0.05449. A copy of the invoice provided does not specifically state that excise duty has been paid on the oil, however, a statement that you sent into the ATO identifies the amount of duty on each transaction. This statement details dates and payment dates from July 2008 onwards. .

Most of the oil is purchased in bulk.

Some oil is purchased in large drums and are exported for the use in by end use customers.

Relevant legislative provisions

Product Stewardship (Oil) Act 2000 section 9

Fuel Tax Act 2006 subsection 41-5(1)

Fuel Tax Act 2006 section 110-5

Excise Act 1901 section 4

Excise Act 1901 section 79

Excise Regulations 1925 regulation 78

Excise Regulations 1925 regulation 78A

Excise Regulations 1925 paragraph 78A(1)(d)

Excise Tariff Act 1925 item 15 of the Schedule

Excise Tariff Act 1925 item 20 of the Schedule

Excise Tariff Act 1925 item 21 of the Schedule

Product Stewardship (Oil) Declaration 2003

Reasons for decision

Product Stewardship (Oil) benefit (PSO Benefit)

Section 9 of the Product Stewardship (Oil) Act 2000 (PSO Act) provides that you are entitled to a PSO benefit:

· for the sale or consumption of recycled oil that you have recycled in Australia, or

· for the consumption in Australia of a gazetted oil for a gazetted use.

You purchase and use oil in the manufacture of units and components for export. This oil is purchased from a supplier. You do not undertake any recycling activities. Therefore you are not entitled to a PSO benefit for the sale or consumption of recycled oil.

Gazetted oils and gazetted uses are specified in Product Stewardship (Oil) Declaration 2003. Gazetted oils include napthenic process oil, paraffinic process oil, petroleum jelly, polyisobutylene succinic anhydride (PIBSA), vegetable derived polyethers and white mineral oil.

The oil you use is not a gazetted oil and the use of the oil in manufactured units and components that you have manufactured is not a gazetted use.

Therefore, as you are neither recycling oil nor using a gazetted oil, you are not entitled to a PSO benefit for oil that is exported in manufactured units and components that you sell overseas.

Drawback of excise duty

Section 79 of the Excise Act 1901 (Excise Act) provides that the regulations may make provision for, and in relation to, allowing drawbacks of Excise duty.

Regulation 76 of the Excise Regulations 1925 (the Excise Regs) provides that a drawback of excise duty may be paid on the exportation of excisable goods with the exception of excisable goods that have been used in the manufacture of goods. Manufacture is defined in section 4 of the Excise Act as

Manufacture includes all processes in the manufacture if excisable goods …

Thus, for the purposes of the Excise Act the essence of manufacture or produce is whether a new and different article has come into existence.

The addition of oil to the manufactured units and components does not create a new or different article. Therefore the addition of oil does not constitute manufacture and the exemption in regulation 76 of the Excise Regs does not apply.

Regulation 78 of the Excise Regs provides that no drawback is payable if the entity or another entity has an entitlement to an increasing or decreasing fuel tax adjustment. That is, if an entity or another entity has an entitlement to a fuel tax credit.

Subsection 41-5(1) of the Fuel Tax Act 2006 (the FTA) provides that you are entitled to a fuel tax credit for the use of taxable fuel used in carrying on your enterprise. Taxable fuel is defined in section 110-5 of the FTA means fuel in respect of which duty is payable under the Excise Act and the Excise Tariff Act 1921 or, the Customs Act 1901 and the Customs Tariff Act 1995. However, it does not include any fuel that has been subject to an excise duty under tariff items 15, 20 or 21 of the Schedule to the Excise Tariff Act 1921.

The oil is subject to excise duty under tariff item 15 of the Schedule to the Excise Tariff Act 1921 at the rate of $0.05449 per litre. The oil you purchase has been subject to a rate of $0.05449 per litre. Accordingly, it is not a taxable fuel and there is no entitlement to a fuel tax credit by an entity or another entity.

Therefore as neither of the exemptions apply to you, you are entitled to a drawback of excise duty paid on oil that is exported in manufactured units or components or in large drums.

However, regulation 78A of the Excise Regs provides a number of conditions in relation to drawbacks. These conditions include that drawback of excise duty is not payable on the exportation of goods unless records that show that duty has been paid on the goods and relevant details of the receipt, use and disposal of the goods by the owner are available. Furthermore, paragraph 78A(1)(d) of the Excise Regs requires that a claim for drawback of excise duty paid in respect of the goods that is an approved form; and sets out the amount of the claim and such other information as that form requires. This claim is to be given after exportation; and not later than 12 months after the day on which the goods are exported.

Information you supplied in your application for ruling indicated that excise duty may have been payable for a period from 1 July 2008. Paragraph 78A(1)(d) of the Excise Regs requires that the claim be given after exportation, and not later than 12 months after the day on which the goods are exported. If your claim is past 12 months, then a drawback of excise duty is not payable.