ATO ID 2002/890: Excise - Payments - Product Stewardship (Oil) Scheme - is excess product 'used oil'?
Date of decision: 16 August 2002
Business line: Indirect Tax

Issue
Is oil that is excess product considered to be 'used oil' for the purposes of section 6 of the Product Stewardship (Oil) Act 2000 (the Act) and therefore eligible for a product stewardship (oil) benefit?

Decision
No. Oil that is excess product is not considered to be 'used oil' for the purposes of section 6 of the Act and therefore is not eligible for a product stewardship (oil) benefit as it has not been employed for some purpose.

Facts
An entity blends and processes petroleum products. As part of the blending or processing, some oil is excess product. Excess product may result from product not meeting certain specifications, an accumulation of returned or manufactured 'off-specification' product in a 'slops' tank, and cleaning sludge from the bottom of storage tanks. The excess product is then subjected to processes described in Product Stewardship (Oil) Regulations 2000 subregulation 4(1).

Reasons for decision
Summary: Under the Act, you are entitled to a product stewardship (oil) benefit for the sale or consumption of recycled oil that you have used or recycled in Australia. Recycled oil is defined in section 6 of the Act as follows: ' recycled oil means: (a) goods produced from used oil; or (b) used oil that has been restored to its former state.' Consistent with the ordinary meaning of 'used', the ATO will accept that an oil product has been used if it has been employed for some purpose. For example, used oil may include oil that has been used to flush lines during the blending process. It does not, however, include oil that is considered to be waste oil in so far as it is excess product for the purposes of commercial blending or processing, as the excess product has not been employed for some purpose. Therefore excess product is not considered to be used oil for the purposes of the Act and therefore is not eligible for a product stewardship (oil) benefit.

Legislative references: Product Stewardship (Oil) Act 2000 section 6
Subject references: Excise Product stewardship oil scheme Excise payments