ATO ID 2010/13: Excise: home consumption - delivered - prepaid entry
Date of decision: 22 December 2009
Business line: Indirect Tax

Issue
Are excisable goods subject to the Commissioner's control for the purposes of item 1, clause 1 of Schedule 1 of the Excise Regulation 2015 (Excise Regulation) if the goods are destroyed after they have been entered for home consumption and excise duty paid, but before they are removed from the licensed premises?

Decision
Yes. Excisable goods are subject to the Commissioner's control for the purposes of item 1, clause 1 of Schedule 1 of the Excise Regulation if the goods are destroyed after they have been entered for home consumption and excise duty paid, but before they are removed from the licensed premises.

Facts
Excisable goods were entered for home consumption under section 58 of the Excise Act 1901 (Excise Act) and the relevant excise duty paid. Authority had been given under section 58 of the Excise Act to remove the goods from the licensed place for home consumption. The goods were destroyed prior to being physically removed from the licensed place.

Reasons for decision
Summary: Section 78 of the Excise Act provides for the granting of remissions, rebates and refunds in respect of excisable goods, subject to the Excise Regulation. Schedule 1 of the Excise Regulation sets out a number of circumstances under which refunds, rebates and remissions are available. The availability of refunds, rebates and remissions is also subject to a number of other provisions under the Excise Regulation. The Excise Regulation at item 1, clause 1 of Schedule 1 provides that one of the prescribed circumstances in which a refund, rebate or remission is available is where: Excise duty has been paid or is payable on goods that have, while subject to the CEO's control: (a) deteriorated; or (b) been damaged, pillaged, lost or destroyed; or (c) become unfit for human consumption. Therefore, entitlement to a refund relies (in part) on whether the goods on which excise duty has been paid were subject to the CEO's (defined in section 4 of the Excise Act to mean the Commissioner of Taxation) control when they were destroyed. 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. The concept of delivery for home consumption can be contrasted with the concept of 'entry' of goods. This is evident from section 61C of the Excise Act which enables the Commissioner to grant permission for goods to be delivered for home consumption without entry. A similar distinction appears in section 58 of the Excise Act which provides for entries to be made by a manufacturer or owner of excisable goods, and passed by an officer, thus authorising the removal of the goods for home consumption or to an approved place. In this instance, the goods that were destroyed had been entered by the manufacturer under section 58 of the Excise Act and duty paid. 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 as being 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 consumed in the licensed premises in which it was manufactured 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 , the primary means by which excisable goods are delivered into home consumption is physical delivery from the licensed premises (although excisable goods consumed on the licensed premises are also considered to have been delivered for home consumption). In this instance, the entity, although it had entered the goods, paid duty, and received permission to remove the goods from the licensed premises, had not yet removed the goods when they were destroyed. Nor did the entity consume the goods (in the sense of putting the goods to some purpose). It follows that where the goods have been destroyed before physically leaving the licensed premises they are still subject to the CEO's control even though they have been entered and duty has been paid and authority to remove them for home consumption has been given.

Legislative references: Excise Act 1901 section 4 section 58 subsection 61(1) section 61C section 78
Case references: Caltex Australia Petroleum Pty Ltd v Commissioner of Taxation [2008] FCA 1951
Subject references: Delivered for home consumption Excise Excise collections Licensing