ATO ID 2007/148: Excise: imposing restrictions on an excise storage licence
Date of decision: 10 July 2007
Business line: Indirect Tax

Issue
Is the Collector able to impose a condition on a storage licence under subsection 39D(3) of the Excise Act 1901 (Excise Act) that restricts the storage of excisable goods to ship's stores and aircraft's stores?

Decision
Yes. The Collector is able to impose a condition on a storage licence under subsection 39D(3) of the Excise Act that restricts the storage of excisable goods to ship's stores and aircraft's stores.

Facts
An entity (provedore) supplies excisable goods in the form of ship's stores and aircraft's stores to overseas ships and international aircraft. The provedore applies for a storage licence in order to receive excisable goods in the form of ship's stores and aircraft's stores under bond.

Reasons for decision
Summary: Section 39D of the Excise Act provides that: A licence is subject to such conditions (if any) as are specified in the licence, being conditions considered by the Collector to be necessary or desirable for the protection of the revenue or for the purpose of ensuring compliance with the Excise Acts. In Re Francesco Martino Applicant v. Australian Taxation Office Respondent [2002] AATA 1242 (the Martino Case ) (unreported, Deputy President Forgie, 29 November 2002), the expression 'protect the revenue' was considered to have two limbs: A further aspect of the first limb is that the Commonwealth should receive all the monies properly payable to it in a timely manner. This principle is also evident in paragraph 39A(2)(k) of the Excise Act. Under this paragraph, the Collector may refuse to grant a storage licence on the grounds that the grant of the licence would delay liability for duty. With regard to ship's stores and aircraft's stores, subsection 160A(1) of the Excise Act provides that excise duty is not payable (except as provided by the regulations). If a provedore did not hold a storage licence, they would be required to acquire excisable goods duty paid. As ship's stores and aircraft's stores are not liable to excise duty, a provedore would need to seek a refund of the duty that they paid on the goods under item 5, clause 1 of Schedule 1 of the Excise Regulation 2015. To avoid this situation, the Collector grants storage licences to provedores under section 39A of the Excise Act so that they do not need to acquire excisable goods duty paid but may instead receive them under bond. However, if a provedore had an unconditional storage licence and sold excisable goods other than in the form of ship's stores or aircraft's stores, then the provedore would be able to hold those goods and delay the payment of duty until those goods are delivered from the provedore's licensed storage place. Such a delay in payment means that the Collector spends more time (and therefore money) than is necessary in carrying out their supervisory duties and responsibilities under the Excise Act. It also means that the Commonwealth will not receive the excise duty properly payable to it in a timely manner. Consequently, it is necessary or desirable for the protection of the revenue to impose a condition on a storage licence granted to a provedore under subsection 39D(3) of the Excise Act that restricts the storage of excisable goods to ship's stores and aircraft's stores.

Legislative references: Excise Act 1901 section 39A paragraph 39A(2)(k) section 39D subsection 39D(3) subsection 160A(1)
Case references: Re Martino v. Australian Taxation Office [2002] AATA 1242
Subject references: Excise Ship's stores