ATO ID 2005/221: Excise: Goods destroyed in transit to, or at, a place of export
Date of decision: 22 July 2005
Business line: Indirect Tax

Issue
Has an excise export movement permission holder accounted for excisable goods to the satisfaction of the Collector, for the purposes of section 60 of the Excise Act 1901 (Excise Act), if the permission holder can prove that the excisable goods were destroyed while in transit to, or at, a place of export specified in the export movement permission?

Decision
Yes. An export movement permission holder has accounted for excisable goods to the satisfaction of the Collector, for the purposes of section 60 of the Excise Act, if the permission holder can prove that the excisable goods were destroyed while in transit to, or at, a place of export specified in the export movement permission.

Facts
An entity holds an export movement permission (granted under subsection 61A(2A) of the Excise Act) that entitles the entity to move certain excisable goods to a place of export specified in the permission. No excise duty has been paid on the goods as they are intended for export. The goods are destroyed while in transit to, or at, the place of export. The entity has provided evidence that proves that the goods have been destroyed.

Reasons for decision
Summary: Section 60 of the Excise Act contains a number of mechanisms that ensure that where a person fails to account for excisable goods to the satisfaction of the Commissioner of Taxation (the Commissioner), the person is liable to pay to the Commissioner an amount equivalent to the duty that would have been payable on those goods if they had been delivered for home consumption. Subsection 60(1) of the Excise Act is relevant where excisable goods are still subject to the Commissioner's (CEO's) control. Subsection 61(1) of the Excise Act states: All excisable goods are subject to the CEO's control until delivered for home consumption or for exportation to a place outside Australia, whichever occurs first. Where goods have not yet been delivered for exportation (delivered to a place of export) subsection 61(1) of the Excise Act ensures the goods remain under the CEO's control. Subsection 60(1) of the Excise Act states, in part: Where a person (including a licensed manufacturer) who has, or has been entrusted with, the possession, custody or control of excisable goods which are subject to the CEO's control: ... (b) when so requested by a Collector, does not account for those goods to the satisfaction of a Collector the person shall, on demand in writing made by a Collector, pay to the Commonwealth an amount equal to the amount of the Excise duty which would have been payable on those goods if they had been entered for home consumption on the day on which the Collector made the demand. Therefore, where goods are in transit to a place of export, a person entrusted with the possession of those goods must, when requested by a Collector (the CEO or an authorised officer), account for those goods to the satisfaction of the Collector. If the person fails to do so, the Collector may demand that the person pay an amount equal to the Excise duty that would have been payable if the goods had been entered for home consumption on the day on which the Collector made the demand. Where goods have been delivered for export, one of the conditions set out in subsection 61(1) of the Excise Act has been satisfied and the goods are no longer subject to the CEO's control. Subsection 60(1C) of the Excise Act ensures that notwithstanding the fact that the goods are no longer subject to the CEO's control, the Collector can require a person entrusted with goods that have been delivered for export to account for those goods. Failure to account to the Collector's satisfaction can result in the person being liable for an amount equivalent to the duty that would have been payable on those goods if they had entered home consumption. Subsection 60(1C) of the Excise Act states: If a person (including a licensed manufacturer) has, or has been entrusted with, the possession, custody or control of excisable goods: (a) on which duty has not been paid; and (b) that have been delivered for exportation in accordance with a permission under section 61A; and (c) the person: (i) fails to keep those goods safely; or (ii) when requested by a Collector, does not satisfy the Collector that the goods have been exported and does not otherwise account for those goods to the satisfaction of the Collector Both subsections 60(1) and 60(1C) of the Excise Act empower the Collector to require a person entrusted with excisable goods to account for those goods. The purpose of section 60 of the Excise Act was examined in Collector of Customs (NSW) v. Southern Shipping Co Ltd (1962) 107 CLR 279. The case predates the Commissioner of Taxation assuming responsibility for Excise matters. The principles outlined in the case remain valid but references to 'Customs control' should be read as 'the CEO's control'. Dixon CJ stated '... on a complete view of s.60 it seems rather to be a provision for the protection of the revenue ...' Menzies J, in discussing subsection 60(1) of the Excise Act stated: ... the account of the goods that is required is an account which shows an authorized relinquishment of possession, custody and control or, despite an unauthorized loss of possession, custody and control, that the goods have not got into home consumption without the payment of duty or that, notwithstanding the failure to keep the goods safely, Customs control over them is still effective. Finkelstein J in Sidebottom v. Guiliano (2000) 98 FCR 579; [2000] FCA 607 stated: The object of s60 is to impose an obligation upon a person in possession, custody or control of excisable goods to ensure that those goods do not find their way into home consumption without the payment of duty. Given the comments of Menzies J. and Finkelstein J., it can be concluded that a person entrusted with excisable goods has accounted for those goods to the Collector's satisfaction provided the person can show: In this instance, the person entrusted with possession of the excisable goods has provided evidence that proves that the goods have been completely destroyed while in transit to, or at, a place of export. Therefore there is no prospect of the goods entering home consumption and the second of the above requirements is satisfied. Accordingly, an export movement permission holder has accounted for excisable goods to the satisfaction of the Collector, for the purposes of section 60 of the Excise Act, if the permission holder can prove that the excisable goods were destroyed while in transit to, or at, a place of export specified in the export movement permission.

Legislative references: Excise Act 1901 Section 60 Subsection 60(1) Subsection 60(1C) Subsection 61(1) Subsection 61A(2A)
Case references: Collector of Customs (N.S.W) v. Southern Shipping Co. Ltd (1962) 107 CLR 279
Subject references: Excisable goods Export of goods