ATO ID 2010/12: Excise: home consumption - delivered - periodic settlement permission
Date of decision: 22 December 2009
Business line: Indirect Tax

Issue
Are excisable goods still subject to the Commissioner's control at the time of their destruction, if they are destroyed after they have been sold, and after preparation of documents required by their periodic settlement permission, but before they were physically removed from the licensed premises?

Decision
Yes. Excisable goods are subject to the Commissioner's control if the goods are destroyed after they have been sold, and after preparation of documents required by their periodic settlement permission, but before they were physically removed from the licensed premises.

Facts
An excise manufacturer holds a periodic settlement permission that was issued by the Commissioner pursuant to section 61C of the Excise Act 1901 (Excise Act). The excise manufacturer stores excisable goods in a licensed place. The excise manufacturer has sold the goods. The excisable goods were loaded onto a truck. The excisable goods were accidentally destroyed on the truck prior to the goods being physically removed from the licensed place. The entity's periodic settlement permission was issued subject to the following condition (which is commonly included in periodic settlement permissions): The entity had prepared a document consistent with the requirements of their periodic settlement permission prior to the excisable goods being loaded onto the truck.

Reasons for decision
Summary: Subsection 61(1) of the Excise Act specifies when excisable goods cease to be subject to the CEO's control. Subsection 61(1) states: 61(1) 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. CEO is defined in section 4 of the Excise Act to mean the Commissioner of Taxation. Excisable goods may be delivered without entry under the authority of permission granted under section 61C of the Excise Act which states, in part: 61C(1) A Collector may give permission in writing to a person specified in the permission to deliver for home consumption from a place specified in the permission goods of a kind so specified that are subject to the CEO's control, and, until the permission is revoked, the permission is authority for that person to deliver for home consumption from that place goods of that kind that are subject to the CEO's control (other than goods that a Collector has directed are not to be delivered for home consumption under this section) notwithstanding that an entry of the goods for home consumption has not been made and passed under this Act. Therefore, in order to determine when goods leave the Commissioner's control, we must determine what constitutes 'home consumption' and when goods are 'delivered for home consumption'. The term 'home consumption' is not defined in the Excise Act. However, based on cases that have looked at this issue, it is evident that it is accepted that it is a term of broad application, intended to capture all domestic use of excisable goods manufactured in Australia (see Caltex Australia Petroleum Pty Ltd v. Commissioner of Taxation [2008] FCA 1951 ( Caltex Case ) and Moama Refinery Pty Ltd v. Chief Executive Officer of Customs [2001] FCA 1287). The Excise Act does not define 'delivered for home consumption'. However, this issue was considered in detail in the Caltex Case , where Sundberg J, in considering whether fuel manufactured and consumed on the licensed premises had been delivered for home consumption, stated: [140] I agree with the Commissioner that Caltex delivered the residual oils for home consumption for the purposes of the Excise Act. The Excise Act does not refer to delivery to a person but adopts the more ample language of delivery for or into home consumption. While I accept that the typical case of delivery will involve the movement of excisable goods from one person or place to another, the language of the Excise Act is sufficiently broad in my view to apply to the less typical case of consumption by a manufacturer at its own premises... Sundberg J reiterates his view in paragraph 144 where he states: ... The section also accommodates and is consistent with a delivery for home consumption constituted by a use of the relevant goods at that place. Whilst the Caltex Case discusses the concept of 'deliver for home consumption' in the context of section 61C of the Excise Act, the discussion is equally relevant to the concept of 'delivery for home consumption' generally in the Excise Act. Based on the reasoning in the Caltex Case , excisable goods are generally delivered into home consumption when they are physically delivered from the licensed premises (although excisable goods that are consumed on the licensed premises are also considered to have been delivered for home consumption). It follows that where an entity has sold goods and prepared the appropriate documentation under their periodic settlement permission, but the goods have not yet left the licensed premises, they remain under the CEO's control.

Legislative references: Excise Act 1901 section 4 subsection 61(1) section 61C
Case references: Caltex Australia Petroleum Pty Ltd v Commissioner of Taxation [2008] FCA 1951
Subject references: Delivered for home consumption Excisable goods Excise Excise collections Licensing Weekly settlement permission