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FEDERAL COURT OF AUSTRALIA

Moama Refinery Pty Ltd v Chief Executive Officer of Customs

[2001] FCA 1287

Ryan J

10 September 2001 - Melbourne

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Ryan J.    This is an application by way of appeal under the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act) from a decision of the Administrative Appeals Tribunal (the tribunal) given on 5 June 2001. The tribunal had been requested to review a decision of the respondent Chief Executive Officer of Customs to demand payments from the applicant (Moama) of $2,462,097.07 pursuant to s 60 of the Excise Act 1901 (Cth). The excise was said to be exigible on petroleum products purchased by Moama from Burmah Fuels Australia Ltd (Burmah) and delivered to another company, DCF Pty Ltd (DCF) between 1 December 1998 and 19 February 1999.

  2  In its reasons for decision the tribunal referred to evidence, which it appeared to accept, on affidavit from Ms White, an employee of Moama. The effect of that evidence, as summarised by the tribunal, was:

   

She said she was advised by Mr N Cherry, a then director and the person responsible for day to day management, that he had entered into a supply arrangement with DCF Pty Ltd ("DCF"). The arrangement in place was for DCF to order unmarked bulk solvent products which would be supplied by Burmah Fuels Australia Pty Ltd ("Burmah"). The product was picked up by a transport operator arranged by Moama from the Burmah depot at Port Botany for direct delivery to DCF. Ms White said that she was told by Mr Cherry that DCF held a Remission Certificate from Australian Customs Service ("ACS") and that Burmah had obtained a permission under section 61A of the Act and was aware that the product was being transported direct to DCF. Ms White was responsible for preparing purchase orders to Burmah and delivery dockets and invoices to Mochem Pty Ltd ("Mochem"), the exclusive distributor of Moama's products. Mochem would then prepare delivery dockets and invoices to DCF. Ms White said that she did not organise the transport arrangements and did not know whether they were done by Mr Cherry or DCF.

  3  The tribunal, in its reasons, went on to recount various communications between Ms White and Mr Driver of Burmah and Mr Walker of the Australian Customs Service (ACS), and continued:

   

Ms White said that she had understood that DCF had a Remission Certificate provided to Moama by letter dated 20 November 1998. She provided a copy of that letter to Mr Walker on 19 February 1999 and was advised that it was not a valid certificate. Ms White was not aware at that time what a Remission Certificate looked like. However, she maintained that it was her understanding that it had not been the practice within the petroleum products industry to require production of such certificates before selling unmarked and excise free products.

  4  Evidence was also given to the tribunal by Mr Walker, formerly of ACS, now of the Australian Taxation Office (the ATO), which has taken over from ACS the responsibility of administering the relevant part of the Act. That evidence was summarised by the tribunal in these terms:

   

He said that, on 17 February 1999, during a telephone conversation with Mr Driver of Burmah, he became aware that Burmah was delivering fuel to Moama on an "under-bond" basis without a section 61A permission. He told Mr Driver to cease such deliveries. He said that Mr Driver maintained that application had been made and oral authority given in September 1998 to enable trucks waiting at the terminal over a weekend to be moved. Mr Walker said that he checked with Mr Thornton of ACS Sydney who confirmed that such oral authority had been given on the assumption that the section 61A permission was in the course of being processed. He said that, after telephone conversations with Ms White on 19 February 1999 and explaining the requirement for Moama to have a copy of a DCF Remission Certificate, he received by facsimile a copy of the DCF letter of 20 November 1998. After checking licensing records he advised Ms White that the licence number quoted by DCF did not exist and the document was false. He faxed copies of an application for permission to move product and a genuine Remission Certificate to Ms White. He maintained that Ms White had told him that no deliveries had been made to DCF at that time but that Moama was "just setting up as a client". Mr Walker denied that, either formerly or now, the practice in the petroleum products industry has been to not require production of Remission Certificates before selling products unmarked and duty free. He said that, in February 1999, the policy was that the party controlling the movement of the fuel, that is the party who arranged the transport, was the party who needed to apply for the section 61A permission. If there was no such permission, the policy dictated that the party who moved the product, Moama in this case, was liable for the excise. Mr Walker accepted that an interpretation of the Act placing liability on Burmah for releasing the product without authority was possible. He said that he was first aware of DCF when Ms White had telephoned him on 19 February 1999. After obtaining details of deliveries from Burmah, Mr Walker said that he checked the returns from Moama and considered that excise had not been paid. He then prepared a request to account for excisable goods to be sent to Moama.

  5  After referring to evidence from other ATO officers who, like Mr Walker, have transferred from ACS, the tribunal set out various provisions of the Excise Act 1901 (Cth), being ss 60 and 61, part of s 61A and s 61C, and rehearsed the competing submissions of the parties. It then made these findings:

   

It is clear that the goods in question in this case were under the control of Customs and were not removed from Port Botany terminal under permission given by the ACS pursuant to section 61A of the Act. However, it would appear that both Burmah and Moama were under the impression that there was a section 61A permission in force. While we say that it would appear that Moama was under that impression, it is not possible to be certain on this point. Without the evidence of Mr Cherry and the unavailability of Ms White for cross-examination, the only evidence of this is the statement by Ms White in her affidavit that she had been told by Mr Cherry that Burmah had the section 61A permission. It is possible that Mr Cherry was well aware that such permission did not exist. Burmah, through Mr Driver, should have been well aware that it did not exist. On the evidence of Mr Thornton, Mr Driver was given oral permission on one occasion in September 1998, was sent an application to complete and would be expected to know that no written permission was provided subsequently. Unfortunately, with no evidence from Burmah, we must conjecture that Burmah continued to allow the Moama arranged transport operators to take the product under the mistaken understanding that this was permitted by section 61A.

 

What is in no doubt is that Moama ordered the product and took delivery on the basis that they were excisable goods and subject to the control of Customs. It then purported to transfer and sell the goods to DCF free of excise duty. Moama was in possession of a permission under section 61C of the Act and a permission under section 61A to remove goods from Van Ommeren Tank Terminals at Hastings, Victoria to Moama Refinery at Moama, New South Wales. A condition of the section 61C permission was that the permission holder could not deliver product to another person or company who did not provide, at or before delivery, a copy of the Remission Certificate issued to that person or company by the ACS. Both of these permissions were dated 5 August 1998 and sent to Moama with other documents by ACS under cover of a letter dated 18 August 1998. This letter requested acknowledgment of receipt and a statement that Moama understood and accepted the conditions contained in the documents.

  6  As to the letter dated 20 November 1999 from DCF which had been seen by Ms White on 19 February 1999, the tribunal said:

   

This letter was brief, stated a Sales Tax Registration Number and stated "DCF Pty Ltd is the holder of licence number 1500 3349 for the making of excisable goods". The Tribunal was not provided with a copy of a genuine Remission Certificate but, whatever it may look like, we are unable to believe that any person involved in regular dealing in excisable goods would regard the letter from DCF as complying with the condition of the section 61C permission.

  7  The tribunal then adverted to the possibility, which it acknowledged, that a demand under s 60 could have been made on Burmah, and concluded:

   

… we cannot find that Burmah was aware of anything other than goods ordered by Moama were collected from its premises and that Moama was thereafter responsible for accounting for excise duty.

  8  After noting that it was unable to determine the role of Mr Cherry in the transactions, the tribunal concluded in respect of him:

   

While there is no evidence to suggest that Mr Cherry knew that DCF did not have a Remission Certificate, it is not unreasonable to find that he was careless, at least, in not ensuring that Moama's permission under section 61C was complied with.

  9  Against that factual background the tribunal concluded that the requirements of s 60(1) of the Excise Act 1901 (Cth) had been satisfied so as to warrant the making of the demand on Moama. In the penultimate paragraph of its reasons, it ruled:

   

Moama was aware that the goods were subject to control of Customs. Section 61 provides that excisable goods are subject to control of Customs until delivered for home consumption or for exportation. Pursuant to the permission under section 61C, Moama was required to account for the goods unless provided with a Remission Certificate at or before delivery. It was not so provided. Whether Mr Cherry thought it had been or not is not possible to determine. The simple and inescapable fact is that no Remission Certificate was provided. We are not prepared to accept that the collection of the goods by Moama engaged carriers at Burmah premises meant that the goods were, at that point, "delivered for home consumption" by Burmah. While no section 61A permission existed, Burmah was selling to Moama on a clear understanding that the goods remained subject to control of Customs, were being purchased by a licensed manufacturer and not for home consumption. We recognise that Moama can use the same argument that it had the same understanding in relation to its sales to DCF. The evidence cannot satisfy us that this was the fact. There was no evidence or information before the Tribunal as to whether DCF actually existed or what happened to the goods after they left Burmah.

  10  The tribunal then referred to Collector of Customs for the State of NSW v Southern Shipping Company Limited (1962) 107 CLR 279 (Southern Shipping), in support of the proposition that s 60 is directed primarily to the protection of the revenue rather than the imposition of a penalty. The tribunal concluded:

   

In this case, Moama was entrusted with the possession, custody and control of excisable goods when collected from Burmah. It could not account for the goods to the satisfaction of a Collector and the demand in question was a proper demand under section 60 of the Act.

  11  Moama accepts that its possession of permission in writing under s 61C cannot avail it in the present case because a permission under that section authorises only delivery for home consumption of goods subject to Customs control from a place specified in the permission. It is acknowledged the only permission under s 61C possessed by Moama was for delivery of excisable products from its premises, Moama Refinery, Hillside Lane, Moama, whereas the delivery to DCF was made from the premises of Burmah at Port Botany. Section 61A contemplates the issue of a permission to remove goods subject to the control of Customs from one place specified in the permission to another place, also specified in the permission. Although it may have been believed that Moama held such a permission authorising movement of the subject goods to the premises of DCF, it is now accepted that no such permission had been given.

  12  In the present case, the ATO, on 6 April 1999, issued a written request to Moama pursuant to s 60 of the Excise Act 1901 (Cth) for it to account for the subject goods. That request recited:

   

Information obtained from the records of Burmah Fuels Australia Ltd shows that during the period 28 September 1998 to 19 February 1999 inclusive, your company purchased 100,757 litres of leaded petrol, 5,318,275 litres of unleaded petrol, and 9,934,466 litres of diesel fuel from them on an "under bond" basis. A print out listing these sales is attached. The fuel purchased was excisable and subject to the control of the Customs.

 

Burmah Fuels Australia Ltd state that the fuel referred to above was sold to your company, at the rack, at the Van Ommeren terminal, Port Botany. They also state that your nominated carriers removed the fuel from the terminal.

  13  It then set out the text of s 60(1) of the Excise Act 1901 (Cth) and concluded:

   

As a Collector within the meaning of the Excise Act 1901 (Cth), I hereby request your company, being an entity with possession, custody or control of the excisable goods referred to above, to account for those goods. If the goods cannot be satisfactorily accounted for by close of business on 27 April 1999, it is my intention to formally demand an amount equal to the amount of Excise duty in accordance with sub-section 60(1) of that Act.

  14  After agreement had been reached between the ATO and solicitors acting for Moama on an audit to be conducted by a nominated firm of accountants which was to be a "final determination so far as [the ATO is] concerned of the request to account in relation to volumes", and which was completed on 29 June 1999. Thereafter, the ATO, on 12 July 1999, made the following demand on Moama:

   

In a letter dated 29 June 1999, Mulqueen Griffin Rogers Pty Ltd provided information to me on behalf of your company with respect to fuel delivered to DCF Pty Ltd. The information was provided in response to a request to account for the goods.

 

As a Collector for the purposes of the Excise Act 1901 (Cth), I have examined the information supplied and have decided that the goods have not been accounted for to my satisfaction for the following reasons:

 i.  No accounting has been given with respect to seven deliveries.

 ii.  Five shipments have not been included on weekly returns.

 iii.  The balance have been entered under tariff classification 11H2d or 11C2b, which both require that the goods contain at least the prescribed proportion of the marker. The goods are described in your records as unmarked.

 

Unmarked Solvent B delivered for use otherwise than as a fuel falls to 11H2f of the Schedule to the Excise Tariff Act 1921 (Cth). Unmarked Solvent H delivered for use otherwise than as a fuel falls to 11C2c of the same schedule. Both classifications currently attract a duty rate of $0.43355 per litre.

 

The attachment to this demand lists the deliveries referred to in the letter mentioned above. Were the goods to be entered for home consumption today, excise duty of $2,462,097.07 would be payable. Accordingly, pursuant to Section 60(1) of the Excise Act 1901 (Cth), I hereby demand payment in the amount of $2,462,097.07, being an amount equal to the amount of duty which would be payable on the goods were they to be entered for home consumption today, be made within fourteen days of the date of this letter.

Were the goods subject to Customs control?

  15  Moama contended that 3 conditions had to be satisfied to give rise to the obligation to pay imposed by s 60 of the Excise Act 1901 (Cth), namely that a person should have had possession, custody or control of excisable goods, that the goods were subject to Customs control and that the person failed to keep the goods safe or failed, on request, to account for them to the satisfaction of a Collector. It is conceded for present purposes that the first of those conditions was satisfied in that the goods were under the control of Moama. However, whether they were, at the same time, subject to Customs control was said to turn on whether they had been delivered for home consumption within the meaning of s 60 of the Excise Act 1901 (Cth).

  16  Section 60 provides:

   

(1) 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:

 (a)  fails to keep those goods safely; or

 (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.

 

(1A) Where:

 (a)  excisable goods subject to the CEO's control are, by authority of an entry passed under this Act or of a permission given under section 61A, taken from a place for removal to another place;

 (b)  the goods are not, or part of the goods is not, delivered to that other place; and

 (c)  when so requested by a Collector, the person who made the entry or to whom the permission was given, as the case may be, does not account for the goods, or for that part of the goods, as the case may be, 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 the goods, or on that part of the goods, as the case may be, if they had been entered for home consumption on the day on which the demand was made.

 

(1B) Where:

 (a)  excisable goods subject to the CEO's control are, by authority of a permission given under section 61A, removed to a place other than a warehouse; and

 (b)  the person to whom the permission was given fails to keep those goods safely or, when so requested by a Collector, does not account for the 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 demand was made.

 

(2) An amount payable under subsection (1), (1A) or (1B) of this section shall be a debt due to the Commonwealth and may be sued for and recovered in a court of competent jurisdiction by proceedings in the name of the Collector.

 

(3) In proceedings under subsection (2), a statement or averment in the complaint, claim or declaration of the Collector is evidence of the matter or matters so stated or averred.

 

(4) This section does not affect the liability of a person arising under or by virtue of:

 (a)  any other provision of this Act; or

 (b)  a security given under this Act.

  17  It is to be noticed that s 60 does not itself define the circumstances in which goods are entered for home consumption. It merely quantifies the amount payable pursuant to a demand made by a Collector under the section as the amount which would have been payable had the goods been entered for home consumption on the date of the demand. The question critical to the application of s 60 in the present case was whether Moama had been entrusted with the possession, custody or control of excisable goods which were subject to the control of Customs. That was a question which fell to be answered by reference to s 61, which provides:

   

(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.

 

(2) A person must not, without permission, intentionally move, alter or interfere with excisable goods that are subject to the CEO's control knowing, or being reckless as to whether, the goods are excisable goods that are subject to the CEO's control.

 

  Penalty: 2 years imprisonment or the greater of:

 (a)  500 penalty units; and

 (b)  5 times the amount of duty that would be payable if the goods had been entered for home consumption on the penalty day.

 

Note: See section 4AA of the Crimes Act 1914 (Cth) for the current value of a penalty unit.

 

(3) A person must not, without permission, move, alter or interfere with excisable goods that are subject to the CEO's control.

 

  Penalty: 100 penalty units.

 

(4) Strict liability applies to subsection (3).

  18  Some light is thrown on the concepts of entry and delivery for home consumption by subss 58(1) and (1A) of the Excise Act 1901 (Cth), which provide, under the heading "Entry for Home Consumption etc":

   

(1) Subject to subsections (2) and (4), entries may be made by the licensed manufacturer or owner and passed by an officer and may authorize the removal of excisable goods for:

 (a)  Home consumption.

 (b)  Removal to an approved place that is an approved place in relation to goods of all kinds or in relation to goods of the kind that are to be entered.

 

(1A) An entry in subsection (1):

 (a)  shall be made in accordance with an approved form, or in a manner approved by the CEO;

 (b)  shall contain such information as is required by the CEO;

 (c)  shall be signed or authorised in a manner required by the CEO; and

 (d)  shall be lodged with, or transmitted to, the CEO.

  19  The relationship between payment of duty and delivery of goods into home consumption is created by s 59 which stipulates:

   

Subject to section 59A, the excise duty on excisable goods must be paid at the rate in force:

 (a)  when the goods are delivered into home consumption under section 61C(2); or

 (b)  when payment is made;

whichever is the earlier.

  20  I agree with the submission of Mr Murphy of Counsel, who appeared with Ms M Lodge for Moama, that "delivered for home consumption" as used in ss 59 and 61(1) means, as a matter of ordinary English, "delivered for consumption in Australia". Thus, in Southern Shipping, McTiernan J, at 290, quoted this passage from the judgment of O'Connor J in The King v Lyon (1906) 3 CLR 770 at 784:

   

… the whole policy of the Customs Act 1901 (Cth), as indicated by a number of sections, is that, from the time of importation until the time of paying duty, the customs shall not lose control of the articles imported. That is indicated directly in s 30, which provides that imported goods shall be subject to the control of the customs from the time of importation until delivery for home consumption or exportation. The object of that provision, if it were necessary to give any reasons for its enactment, is obvious; if once goods go into home consumption, that is, into circulation, it becomes almost impossible to trace them. The only security the customs authorities could have in such a case for the payment of duty would be in most cases the personal security of the importer. Therefore it is, if the Act is to be effective, that all through the dealings with the goods, from the time they are first imported until duty is paid, they must be kept under customs control.

  21  After reproducing that passage, McTiernan J observed (Lyon at 784):

   

This statement is, mutatis mutandis applicable to the Excise Act 1901 (Cth). The object of s 60 is to effectuate the policy in relation to excise explained by O'Connor J.

  22  There can be no suggestion, on the facts of the present case, that the subject fuel had ever been "entered" for home consumption as contemplated by s 58(1)(a) of the Excise Act 1901 (Cth). Without such entry, or authorisation, they could not have been "delivered" for home consumption and, accordingly, by force of s 61(1) they remained subject to Customs control.

Can a demand under s 60(1) remain extant against more than one person at the same time?

  23  The circumstances of the present case, Mr Murphy submitted, created the potential for a demand under s 60(1) to be made on at least 3 entities, Burmah, Moama and BCF which was accepted as having received the fuel. That gave rise, he contended, to the questions of law whether a demand under s 60(1) could be made in respect of the same excisable goods on more than one person and, if so, on which person it should have been made. It was revealed in the course of discussion that the second of those questions was referable to the exercise of a discretion as to which entity was the more or most appropriate recipient of the demand. However, Mr Murphy's primary contention was that, in the circumstances of this case, the Act permitted a demand under s 60(1) to be made only on Burmah. That consequence was said to be entailed by the fact that it was Burmah which had breached the Act by failing to have a written permission under s 61A, presumably for the removal of the fuel from the premises of Burmah to the premises of Moama. Because Burmah's breach was first in time, so the argument went, Customs was precluded from making a demand on Moama, whose breach was later, until it had exhausted the possibility of recovering the unpaid duty from Burmah.

  24  In support of the construction that the Act permits the making of a demand under s 60(1) on only one person at a time, reference was made, for the purpose of distinguishing it, to Wing On & Co Ltd v Collector of Customs (NSW) (1938) 60 CLR 97. In that case, tobacco paper exigible to duty was brought into Australia by a seaman and sold to the defendant without duty having been paid on it. The defendant, knowing that duty had not been paid, onsold the paper to a third party. The question for the High Court was whether the defendant was the owner for the purposes of s 153 of the Customs Act 1901 (Cth) which provided:

   

All duties shall constitute Crown debts charged upon the goods in respect of which the same are payable and payable by the owner of the goods and recoverable at any time in any Court of competent jurisdiction by proceedings in the name of the collector.

  25  Section 4 of the same Act provided:

   

In this Act except where otherwise clearly intended … "Owner" in respect of goods includes any person (other than an officer of customs) being or holding himself out to be the owner, importer, exporter, consignee, agent, or person possessed of, or beneficially interested in, or having any control of, or power of disposition over the goods.

  26  Latham CJ rejected an argument on behalf of the appellant that "owner" in s 153 meant "owner at the time of importation of the goods". Rich J at 107, divined the intention of the legislature to be:

   

that until the goods were entered for home consumption at least none was to take ownership except cum onere, and that if he enjoyed full ownership he should pay the charge, ie, the duty. The facts show that this was the situation of the appellant who, I think, comes fairly within the meaning of the provision making the duty payable by the owner.

  27  Dixon J was in general agreement with Latham CJ but observed at 109:

   

When s 153 charges the duty upon the goods, it means, I think, to impose a specific charge upon the goods which shall bind all persons taking them, at all events unless they are bona-fide purchasers for value.

  28  Wing On makes clear, I consider, that several persons can successively be "owners" of goods and remain so while the goods continue to be subject to Customs control. There is nothing express or implied in s 60 to indicate that each of those successive "owners" may not be made subject to a demand for payment under that section unless and until duty on the goods has been paid.

Did the Collector's discretion miscarry when a demand was made on Moama?

  29  In the alternative, it was submitted that if, contrary to Moama's first contention, the Act did permit a Collector to elect which of 2 or more available recipients should be served with the demand under s 60(1), it should not, as a matter of administrative discretion, have been served on Moama. The matters which were said to contribute to that result were, first, that Burmah had delivered the product in contravention of the Act and that whether it did so under a mistaken belief as to the existence of a s 61A permission was irrelevant. Second, it was not open to the Customs to rely on the "policy" referred to in the extract from the tribunal's reasons quoted at [4] above as being in force in February 1999. Third, regard should have been paid to the fact that Moama had been endeavouring to comply with the Act, it was under the impression, created by Customs, that Burmah held permission under s 61A, it held itself a permission under s 61C and it had obtained from DCF on 27 November 1998 what it believed to be a remission certificate. Finally, any of Burmah, Mochem and DCF was a more appropriate recipient than Moama of a demand under s 60(1).

  30  The short answer to this question is that the discretion, if it be a discretion, conferred on a Collector by s 60(1) of the Excise Act 1901 (Cth) is completely unfettered. In Southern Shipping, McTiernan J was inclined to regard the discretion under s 60(1) as being whether or not to accept an accounting which had been requested under para (b) of that subsection. His Honour said at 291:

   

Paragraph (b) [of s 60(1)] is in my view a drag-net provision. It exposes every person who has or has been entrusted with the possession, custody or control of excisable goods which are subject to Customs' control to the liability of being requested by the Collector to account for them to his satisfaction. The accounting may be done by producing the goods or, if they are missing, by giving an explanation which is satisfactory to the Collector. He has a discretion, which he is bound to exercise reasonably, to reject what is done or stated by way of accounting for the goods. In my opinion it was reasonable for the Collector to reject the defendant's account of what happened to the goods because the reason for their disappearance from Customs' control, namely breaking entering and stealing, justified the Collector in considering that the defendant failed to keep the goods safely. The defendant was in default under para (a) and that was sufficient to make it liable. Paragraph (b) was not, I think, intended to provide a person who contravenes para (a) with the opportunity of explaining away his default thereunder.

 However, assuming in Moama's favour that the Collector has a discretion, after not accepting a person's accounting, as to whether or not to make a demand on that person, the discretion, as already noted, is unconfined. It therefore attracts the application of the principle formulated in these terms by Mason J in Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 39:

   

What factors a decision-maker is bound to consider in making the decision is determined by construction of the statute conferring the discretion. If the statute expressly states the considerations to be taken into account, it will often be necessary for the court to decide whether those enumerated factors are exhaustive or merely inclusive. If the relevant factors - and in this context I use this expression to refer to the factors which the decision-maker is bound to consider - are not expressly stated, they must be determined by implication from the subject-matter, scope and purpose of the Act. In the context of judicial review on the ground of taking into account irrelevant considerations, this Court has held that, where a statute confers a discretion which in its terms is unconfined, the factors that may be taken into account in the exercise of the discretion are similarly unconfined, except in so far as there may be found in the subject-matter, scope and purpose of the statute some implied limitation on the factors to which the decision-maker may legitimately have regard: see R v Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd (1979) 144 CLR 45 at 49-50, adopting the earlier formulations of Dixon J. In Swan Hill Corporation v Bradbury (1937) 56 CLR 746 at 757-758, and Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 505. By analogy, where the ground of review is that a relevant consideration has not been taken into account and the discretion is unconfined by the terms of the statute, the court will not find that the decision-maker is bound to take a particular matter into account unless an implication that he is bound to do so is to be found in the subject-matter, scope and purpose of the Act.

  31  Nothing in the subject matter, scope or purpose of the present Act compels the conclusion that the affirmative matters listed in [29] above were matters which the Collector was bound to take into account in the exercise of his presumptive discretion. Nor can it be said that the same process of construction entails that the Collector could not legitimately take into account that Burmah mistakenly believed that Moama held a permission under s 61A or the "policy" that a person who moves the product should be primarily liable for the excise. As indicated during the course of argument, there are many other matters which may legitimately be taken into account in the exercise of this discretion. They include, most obviously, the perceived solvency or liquidity of the potential recipients of a demand.

Can a demand under s 60(1) be based on each of the separate grounds specified in paras (a) and (b) of that subsection?

  32  A further argument advanced on behalf of Moama was to the effect that a demand under s 60(1) of the Excise Act 1901 (Cth) can only be based on one of the 2 formulations of the third of the conditions identified in [15] above. Support for that view was said to be derived from Sidebottom v Giuliano (2000) 98 FCR 579 where requests for an accounting of excisable goods were made of several persons, the applicants. Finkelstein J observed at 581, [8]:

   

If the requests for an accounting are not declared to be invalid and the applicants do not satisfactorily account for the goods, Mr Giuliano is entitled to demand payment of the excise alleged to be due in respect of the blended petroleum products and if that amount is not paid he may commence proceedings to recover that sum as a debt due in a court of competent jurisdiction: s 60(2). To succeed in the action it will be necessary for the Collector to establish that each applicant had possession, custody or control of excisable goods which were subject to the control of Customs. It will also be necessary for the Collector to prove either that each applicant had failed to safely keep those goods or alternatively that each applicant had failed to satisfactorily account for them. Sections 60(1)(a) and (b) are not cumulative but are alternative provisions.

  33  After an extensive review of the judgments in Southern Shipping, his Honour continued at 583, [14]:

   

The object of s 60 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. First, the custodian of excisable goods is required to keep them safe, and if he fails to do so then he is liable to pay an amount equal to the excise duty (s 60(1)(a)). Secondly, the Collector is authorised to request an accounting to discover whether or not there has been a breach of that obligation (s 60(1)(b)). If the "undoubted fact" is that a person in possession, custody or control of excisable goods has failed to keep them safely no purpose would be served by an accounting. The Collector can immediately rely upon para (a) and has no need to resort to para (b) for the purpose of making a demand for an amount equal to the unpaid duty. In that circumstance, in my opinion, para (b) cannot be invoked, and the subsection should be read down to that extent. In my view, para (b) can be relied upon when there is doubt about the whereabouts of excisable goods, or doubt as regards whether they have been kept safely. In those cases it is for the person in possession, custody or control to satisfy the Collector that the goods have not gone into home consumption without payment of duty. His failure to do so will render him liable to pay the debt due to the Commonwealth.

  34  It was submitted on behalf of Moama, that in the present case, when the request to account was issued, there was no doubt that the goods had not been kept safely. Accordingly, so the argument went, the demand should have been made pursuant to para (a) of s 60(1), there having been no occasion for the making of a request under para (b). Attention was then directed to whether Customs, having, as Mr Murphy said, wrongly invoked para (b), could rely on para (a) to validate the demand which it had made on Moama.

  35  In the present case, it was far from an "undoubted fact" that the goods had not been kept safely by Moama. As I understand the facts, it was open to Customs to assume that the fuel had been delivered to DCF after payment of a price which included an amount for excise duty. If that be right, it was entirely proper for the Collector to request an account from Moama pursuant to s 60(1)(b). Even if the fact be otherwise, it was far from undoubted that the fuel had not been kept safely so that the ground afforded by s 60(1)(b) (if it and that under para (a) are mutually exclusive), was not available to the Collector.

Could the Collector rely on s 60(1)(a) to support a demand purportedly made in reliance on s 60(1)(b)?

  36  In view of the conclusion just reached in [35] above it is strictly unnecessary for me to consider this final argument advanced on behalf of Moama. However, out of deference to the arguments addressed to it, I shall indicate briefly my reasons for rejecting them.

  37  Reference was made to Danmark Pty Ltd v Federal Commission of Taxation (1944) 7 ATD 333 at 344 and 352, Federal Commissioner of Taxation v Wade (1951) 81 CLR 105 at 116-117 and Revlon Manufacturing Limited v Commissioner of Taxation (1995) 63 FCR 535 at 554 and 556; 32 ATR 48 at 63-4 and 65; 96 ATC 4031 at 4045 and 4046-4047. The last of those cases concerned a notice of assessment under the Sales Tax Assessment Act (No 1) 1930 (Cth) where reference was made to ss 25(2) and 46 of that Act. Section 25 provided, so far as is relevant:

   

 (1)  Where the Commissioner finds in any case that tax or further tax is payable by a person, the Commissioner may make an assessment in relation to the person.

 (2)  Where, under subsection 18(3A) or (4) or 18A(5) or (6), the sale value of any goods has been altered, the Commissioner shall make an assessment in relation to those goods.

 Nevertheless, Beaumont J, as a member of a full court of this court, held at FCR 554-555; ATR 64; ATC 4046:

   

Here we are concerned with a single statute only. It was plain, as the notice said, that the Commissioner was altering the sale value. Although not, strictly speaking, a "determination" of sale value under s 18A(4), any error was, I think, of such a formal character and of such limited dimensions that it could safely be ignored under the falsa demonstratio principle. …

 

The notice made it clear that the Commissioner had determined that the sale value be altered to the extent there mentioned. That was the fundamental consideration and this information was then communicated to the taxpayer. In these circumstances, the erroneous reference to s 25(2) in the notice could, in my view, be disregarded.

  38  Similarly, Wilcox J (with whom Tamberlin J agreed) observed, at FCR 557; ATR 66; ATC 4047:

   

Revlon's liability to pay sales tax does not depend upon the exercise of a power by the Commissioner; it arose out of the operation of the Act itself. The subsections referred to in s 25(2) being inapplicable, the Commissioner was not under an obligation to issue a notice of assessment. He was empowered to do so, by s 25(1). It is pertinent to observe that, in Wade, Kitto J at 116-117 went to contrast the situation he had described, of liability depending on the Commissioner's exercise of power, with a situation where liability was imposed by the Act itself.

   

The situation in the present case is quite different. If the £2,016 formed part of the taxpayer's assessable income by reason of s 26(j), as I think it did, its inclusion in his assessable income in the course of making the assessment was right, whether or not the commissioner referred to s 26(j), and even though he described the amount accurately. No conduct on the part of the commissioner could operate as an estoppel against the operation of the Act.

  39  In Danmark, an assessment of income tax purported, on its face, to have been made under s 31B of the Income Tax Assessment Act 1922-1934 (Cth) empowering the Commissioner to assess a private company to tax on undistributed income as if such income had been distributed as income to the shareholders who would have been entitled to it. Section 34D of the same Act empowered the Commissioner to assess a private company to tax on undistributed income as if it had been distributed to any person who, otherwise than as a shareholder, could have received it had it been distributed. Latham CJ said, obiter, at 344:

   

I draw attention to the fact that the Income Tax Assessment Act 1922-1934 (Cth), s 50(1), requires an objecting taxpayer to state "fully and in detail the grounds on which he relies". If the Commissioner disallows the objection the taxpayer may request the Commissioner to refer the decision to a board of review (s 51) or to a court (s 51A). In either case, the taxpayer is limited upon the review or the appeal to the grounds stated in his objection - s 51(2), s 51A(3). When a taxpayer receives an assessment which purports to be made under a particular provision of the Income Tax Assessment Act 1922-1934 (Cth) he is entitled to ask a board of review or a court to deal with the assessment in relation to the particular provisions under which the Commissioner professes to have made the assessment and in respect of which he has framed his objections. If an assessment is made by the Commissioner under one section and the taxpayer lodges objections in relation to the assessment as so made, and if he is limited upon a review or an appeal to the grounds stated in his objections, it would be manifestly unfair to allow the Commissioner to support the assessment upon the basis of provisions other than those which the Commissioner has stated to be the basis of the assessment. If the objections lodged by the taxpayer are effective in relation to the assessment as actually made, in my opinion, as at present advised, it would be wrong for the court to allow the Commissioner to support the assessment by reference to provisions in relation to which the taxpayer has had no opportunity of raising any objections.

  40  In my view, the amenability of Moama to the issue of a demand under s 60(1) did not depend on the exercise of any power by Customs (other than the issuing of the demand itself). It arose, as Wilcox J said in Revlon out of the operation of the Act itself. There was, accordingly, no scope for Moama to be under any misapprehension as to the basis upon which it was asked to pay duty on the subject fuel.

Conclusion

  41  As will be seen from the foregoing reasons, each of the arguments advanced on behalf of the applicant has been rejected. It follows that the decision of the tribunal has not been infected by any error as to a question of law and should be affirmed. The application must therefore be dismissed with costs.