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Edited version of your written advice
Authorisation Number: 1012724365244
Ruling
Subject: Excise - Other Excisable Beverage
Question
Is your product an excisable good and therefore subject to excise duty?
Answer
No.
This ruling applies for the following periods:
20XX onwards.
Relevant facts and circumstances
• You intend to manufacture a new product.
• You currently own the rights to your product.
• Your product contains spirit and other ingredients and is frozen.
• The spirit used to manufacture your product will be duty paid.
• Your product will contain the equivalent of between 1 and 2 standard drinks, with an alcoholic strength above 10% by volume of alcohol.
Relevant legislative provisions
Section 4 of the Excise Act 1901
Section 5 of the Excise Tariff Act 1921
Item 3 of the Schedule 1 to the Excise Tariff Act 1921
Reasons for decision
Under section 4 of the Excise Act 1901 (Excise Act), excisable goods are goods in respect of which Excise duty has been imposed.
A person cannot manufacture excisable goods, or store excisable goods on which excise duty has not been paid without a licence issued under the Excise Act.
Liability for excise duty arises for excisable goods at the time of manufacture and is payable when the goods are delivered into the Australian market or for export.
Section 5 of the Excise Tariff Act 1921 (Excise Tariff Act) provides that duties of excise are imposed as per the Schedule to that Act.
The Schedule to the Excise Tariff Act sets out all of the goods manufactured or produced in Australia that are subject to excise duty, and the rates of excise duty applicable to each.
The Schedule to the Excise Tariff Act relevantly contains the following excisable goods:
Item |
Sub-item |
Description of goods |
3 |
|
Spirits; Other excisable beverages exceeding 10% by volume of alcohol |
|
3.2 |
Other excisable beverages exceeding 10% by volume of alcohol |
|
3.10 |
Spirits not elsewhere included |
Other excisable beverage exceeding 10% by volume of alcohol
As your product contains more than 10% by volume of alcohol, it may be subject to excise duty under Item 3 of the Schedule 1 to the Excise Tariff Act 1921 (Tariff) as an 'other excisable beverage exceeding 10% by volume of alcohol'.
In order to determine whether your product is an 'other excisable beverage', we first need to determine whether or not your product is a 'beverage'.
The term 'beverage' is not defined for the purposes of the Excise Act. Therefore, we need to look at the ordinary meaning of 'beverage'.
The word 'beverage' is defined in the Macquarie Dictionary to mean, 'any kind of drink, other than water, especially a hot drink or an alcoholic drink'.
The ordinary meaning of the term 'beverage' was also considered in the context of Sales Tax legislation in Bristol-Myers Company Pty Ltd v. Commissioner of Taxation 90 ATC 4553. In that case Lockhart J said at 4557:
I prefer the simpler definition attributed to the word 'beverage' by the Macquarie Dictionary which is simply 'a drink of any kind'.
'Drink' when used as a noun is defined in slightly different ways by the dictionaries, but in my view it means any liquid which is swallowed to quench thirst or for nourishment.
The question to be answered in relation to your product is whether it can be properly described as 'a drink'.
Your product will be sold in a non-liquid state, it cannot be consumed as 'a drink of any kind' because it is not a 'liquid which can be swallowed'. Therefore, your product is not considered to be a 'beverage'.
As your product is not a 'beverage', it falls outside the definition of 'other excisable beverage' and as such will not be subject to excise duty as an 'other excisable beverage'.
It is important to note that the Commissioner's view would be different if your product was not frozen and was sold into the Australian market as a liquid which can be swallowed or in a state thin enough to be consumed from a glass.
Spirit
The term 'spirit' is not defined for the purposes of the Excise Act. However, the Macquarie Dictionary defines the word 'spirit' to include:
19. Chemistry
a. an aqueous solution of ethyl alcohol, especially one obtained by distillation.
b. the essence or active principle of a substance as extracted in liquid form, especially by distillation.
20. a strong distilled alcoholic liquor: a raw spirit.
As your product is not a spirit or other excisable beverage, and none of the other items set out in the Schedule to the Excise Tariff Act apply, your product is not an excisable good and therefore not