Case: R v Lyon [1906] HCA 17 ; (1906) 3 CLR 770
Outcome: considered
Caltex submitted that the residual oils were at no time "delivered" for home consumption because the concept of delivery in the Excise Act signifies a transfer of actual or constructive possession from one person to another. In this case, it said, there was no such transfer because it used the residual oils itself at its own premises. Caltex relied on a passage from O'Connor J's judgment in R v Lyon [1906] HCA 17 ; (1906) 3 CLR 770 ( Lyon ), where his Honour in the context of the customs legislation dealt with the provision for customs control over goods "until delivery for home consumption or exportation" (which provision is mirrored in s 61 of the Excise Act ). His Honour stated at 784: The object of that provision, if it were necessary to give any reasons for its enactment, is obvious; if once goods go into home consumption, that is, into circulation, it becomes almost impossible to trace them. 136 According to Caltex, goods such as the residual oils which never leave its premises cannot be said to "go ... into circulation" and cannot therefore have been "delivered" for home consumption. 139 The Commissioner's submissions can be summarised as follows: (a) Upon their manufacture, Caltex did not sell or export the residual oils. It dedicated them for its own use as refinery fuel at the relevant premises. Its dedication of the oils for that use is plain on the evidence, which demonstrates that Caltex maintained and consumed the oils for that purpose. (b) The expression "delivered for home consumption" (ss 61 and 61C) is broad and should not be read down as applying only to delivery of goods between individuals or between places. Nor should "home consumption" be limited by reference to the identity of the actual consumer (i.e. whether the consumer is a third party or the manufacturer him or herself). (c) The concept of delivery for home consumption is critical to s 61(1) because it determines the period of the Commissioner's control over excisable goods. In s 61(1), the concept exists to distinguish between two places for consumption Australia (home) or overseas (export). The use of the preposition "for" in the phrases "delivered for home consumption" and "delivered for exportation", demonstrate the section is concerned more broadly with the place of consumption rather than the transfer of possession between parties. (d) The phrase "go into circulation" used by O'Connor J in Lyon [1906] HCA 17 ; 3 CLR 770 was intended to explain the concept of home consumption not delivered for home consumption. That much is clear from the context in which his Honour used the phrase, being an explanation of the customs authorities' control over goods as a form of security until payment of the required duty. Here, Caltex's premises are in Australia and consumption of the residual oils within those premises is sufficient for the oils to "go into circulation". (e) The residual oils were delivered for home consumption in a manner provided for by the Excise Act . They were delivered pursuant to Caltex's permissions under s 61C and that delivery gave rise to a deemed entry for home consumption: see s 61C(2). Accordingly, Caltex was required as a condition of its permission to include the residual oils in its weekly return and pay the corresponding duty. 141 Another way of considering this is by reference to s 61. Section 61 renders all excisable goods "subject to [the Commissioner's] control until delivered for home consumption or for exportation to a place outside Australia, whichever occurs first". The control residing with the Commissioner is of broad scope and is critical for the protection of the Commonwealth's excise revenue: see Lyon [1906] HCA 17 ; 3 CLR 770 and Collector of Customs (New South Wales) v Southern Shipping Co Ltd [1962] HCA 20 ; (1962) 107 CLR 279 ( Southern Shipping ). The section contemplates that excisable goods will be delivered for either home consumption or exportation. In my view the section evinces a legislative intention to cover the field in respect of all forms of internal (home) consumption and all exports. Historically, excise duties have been understood as running together with and supplementary to the customs duties traditionally imposed on certain goods. In Philip Morris Ltd v Commissioner of Business Franchises (Victoria) [1989] HCA 38 ; (1989) 167 CLR 399 at 427, Mason CJ and Deane J approved the following passage from Quick and Garran's Annotated Constitution of the Australian Commonwealth (1901): The fundamental conception of the term [excise] is that of a tax on articles produced or manufactured in a country. In the taxation of such articles of luxury, as spirits, beer, tobacco, and cigars, it has been the practice to place a certain duty on the importation of these articles and a corresponding or reduced duty on similar articles produced or manufactured in the country; and this is the sense in which excise duties have been understood in the Australian colonies, and in which the expression was intended to be used in the Constitution of the Commonwealth. 143 Contrary to Caltex's submissions, I do not accept that the reference in Lyon [1906] HCA 17 ; 3 CLR 770 to goods going into circulation necessitates a more restricted construction of "delivered for home consumption". Justice O'Connor's reference to going into circulation was used to explain how effective security over goods is lost once they have entered home consumption. His Honour was not there describing the concept of delivery nor, more importantly, intending to limit its scope. He was drawing attention to the policy of the customs legislation and the importance of the customs authorities' having a form of security over imported goods to ensure the payment of duty. I agree with the Commissioner that Caltex's dedication of the residual oils for consumption by it at its premises is sufficient, in the sense O'Connor J had in mind, for the oils to "go into circulation". 144 Similarly I reject Caltex's submission that the words "from a place" in s 61C mean that excisable goods must be removed from that place before they can be considered "delivered" for home consumption. Again, while Caltex's construction accords with what will occur in the typical case, the section is not limited to that situation. The section also accommodates and is consistent with a delivery for home consumption constituted by a use of the relevant goods at that place. Furthermore, the reference to a place in s 61C seems to me to be more concerned with the manner in which the Commissioner's control can be effectively exercised. Section 61C follows ss 61 , 61A and 61B , each of which concern itself with the Commissioner's control and the granting of permissions. In the case of s 61C , it seems to me that it is a necessary or at least convenient measure in permitting deliveries into home consumption without formal entries, that such activity is authorised only in respect of certain specified premises at which the Commissioner's control and supervision can be effectively exercised. 145 For these reasons, I consider that Caltex delivered the residual oils for home consumption pursuant to its s 61C permissions. Accordingly, if I am wrong on the "refined" point, then Caltex was obliged to account for the residual oils in its weekly returns and is liable to pay the requisite duty on them. 154 In relation to (b), Caltex's submission has the effect that s 60 could only operate where excisable goods have not in fact been delivered for home consumption. The Commissioner submitted that s 60 applies whether or not goods have been delivered for home consumption. He emphasised that the purpose of the Commissioner's control over excisable goods is to ensure that duty is properly paid (relying on Lyon [1906] HCA 17 ; 3 CLR 770 and Southern Shipping [1962] HCA 20 ; 107 CLR 279) and the obligations imposed by s 60 are designed to ensure that the goods do not find their way into home consumption without proper payment (relying on Sidebottom [2000] FCA 607 ; 98 FCR 579). More particularly the Commissioner said that s 60 is aimed directly at the unauthorised relinquishment of possession, which would include delivering goods for home consumption in a manner that was not authorised, principally where there is no payment of duty.