ATO ID 2012/76: Eligibility for refund of excise paid on beer manufactured at an eligible brewery and classified to subitem 1.15 or 1.16 in the Schedule to the Excise Tariff Act 1921
Date of decision: 31 August 2012
Business line: Indirect Tax

Issue
Does the refund circumstance at item 21, clause 1 of Schedule 1 of the Excise Regulation 2015 (Excise Regulation) apply to beer that is entered for home consumption under either subitem 1.15 or 1.16 in the Schedule to the Excise Tariff Act 1921 (Excise Tariff Act)?

Decision
No. Because beer under subitems 1.15 and 1.16 of the Schedule to the Excise Tariff Act is not sold, item 21, clause 1 of Schedule 1 of the Excise Regulation does not apply.

Facts
A brewery is operated by an entity that is legally and economically independent of any other entity that operates a brewery. The entity sells, directly from the brewery, beer they manufacture at the brewery. Excise duty is paid on the beer that is sold. The brewing equipment and facilities of the brewery are also made available to individuals to brew their own beer. The individuals pay for the ingredients, use of the equipment, recipes and are responsible for their own brews. Beer brewed by the individuals is not sold at the brewery. The operator of the brewery enters the beer for home consumption under subitems 1.15 or 1.16 of the Schedule to the Excise Tariff Act and pays excise duty.

Reasons for decision
Summary: Section 78 of the Excise Act 1901 (Excise Act) provides that a refund of excise duty may be allowed in prescribed circumstances. Section 8 of the Excise Regulation states that the prescribed circumstances are listed in Schedule 1. Item 21, clause 1 of that Schedule includes excise duty that has been paid on beer manufactured in an eligible brewery during the financial year. Item 21 does not appear to directly limit its application to beer that is sold from the brewery, however, the meaning of the term 'eligible brewery' is given in regulation 6 which states an: eligible brewery means a brewery that: (a) is operated by an entity that is legally and economically independent of any other entity that operates a brewery; and (b) sells beer (whether wholesale or retail), on which excise has been paid, directly from the manufacturing premises of the brewery. The Commissioner considers that item 21 and regulation 6 of the Excise Regulation must be read together and, in context, the beer referred to in the refund circumstance is the beer which qualifies the brewery as an eligible brewery. That is, the beer referred to in item 21 must be beer that is sold from the manufacturing premises of the brewery for the refund to be applicable. Beer described at subitems 1.15 or 1.16 of the Schedule to the Excise Tariff Act is beer of a particular strength of alcohol by volume and which is produced for non-commercial purposes using commercial facilities or equipment. This is beer that is not sold. Although the beer is made using the equipment of the brewery, neither the brewery nor anyone else sells it from the manufacturing premises of the brewery. Hence, the refund circumstance in item 21, clause 1 of Schedule 1 of the Excise Regulation does not apply to beer entered for home consumption under subitems 1.15 or 1.16 in the Schedule to the Excise Tariff Act.

Legislative references: Excise Act 1901 section 78
Subject references: Excise Beer Refund