Excise guidelines for duty free shops

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09 REMISSIONS and EXEMPTIONS

9.1 PURPOSE

9.2 INTRODUCTION

9.3 POLICY AND PRACTICE

9.3.1 WHEN CAN I APPLY FOR A REMISSION OF EXCISE DUTY?

9.3.2 WHEN ARE EXCISABLE GOODS EXEMPT FROM EXCISE DUTY?

9.4 PROCEDURES

9.4.1 HOW DO I APPLY FOR A REMISSION?

9.4.2 HOW DO I GET A PERIODIC SETTLEMENT PERMISSION (PSP)?

9.4.3 WHAT DOES MY PSP INCLUDE?

9.4.4 WHAT DO I DO IF I NEED MORE INFORMATION?

9.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO REMISSIONS AND EXEMPTIONS?

9.7 LEGISLATION (quick reference guide)

9.7.1 Excise Act 1901

9.7.2 Excise Regulations 1925

9.7.3 Crimes Act 1914

9.1 PURPOSE

This chapter deals with:

• when you can apply for a remission
• when excisable goods are exempt from excise duty
• who can access excisable goods free of excise duty
• how to apply for a remission
• how to get a Periodic settlement permission (PSP)
• what a PSP includes, and
• penalties that can apply to offences in relation to remissions and exemptions.

9.2 INTRODUCTION

A remission of excise duty extinguishes the liability for duty that was created at the point of manufacture.

In some circumstances the excise duty may be subject to a complete or partial remission. [186]

9.3 POLICY AND PRACTICE

9.3.1 WHEN CAN I APPLY FOR A REMISSION OF EXCISE DUTY?

You can apply for a remission of excise duty payable on your excisable goods if the following circumstances apply while the goods are subject to excise control :

1. Where the excisable goods have deteriorated or been damaged, pillaged, lost or destroyed, or become unfit for human consumption [187]

   'Pillaged' means to strip of money or goods by open violence, as in war; plunder. [188] This does not cover simple cases of theft.

   For more information about payment of duty see Chapter 8 - Accounting for excisable goods.

   Example 9A A carton of bottled brandy is dropped inside the duty free shop damaging the contents. The duty free shop applies for a remission of duty on the damaged goods. On receiving approval, the duty free shop destroys the damaged goods and retains records of the destruction.

    

   Example 9B Other excisable beverages containing milk products remain unsold in a duty free shop and have deteriorated to a point where they are unfit for human consumption. The duty free shop applies for a remission of duty on the beverages. On receiving approval, the duty free shop destroys the unsaleable stock and retains records of the destruction.

   However, if excisable goods are lost then the same circumstances will apply as described above for goods that are pillaged.

2. Where the goods are not worth the amount of excise duty payable on the goods. [189]

    

   Example 9C A carton of spirits is water damaged and the packaging and labels of the bottles is severely affected. They would only be able to be sold at a greatly reduced price, which is less than the   excise duty that would be payable on the spirits. The duty free shop applies for a remission of duty on the beverages.   On receiving approval, the duty free shop destroys the unsaleable stock and retains records of the destruction.

    

3. The excisable goods are for sale to diplomatic or consular missions and the goods are to be delivered under your Periodic settlement permission (PSP). [190]

   The PSP allows you to deliver these goods into the Australian domestic market. (For example, the terms of the PSP may require the manufacturer to submit an Excise remission (NAT 4289) to us, after delivery of the cigarettes.)

   You should only accept orders on the official stationery, or official order, of eligible people or organisations. You must keep a copy of this documentation.

   Example 9D A duty free shop receives an order from a diplomatic mission for cigarettes, for official use. The duty free shop delivers the cigarettes, into the Australian domestic market (to the diplomatic mission), under the terms of their Periodic settlement permission. The duty free shop submits an Excise remission (NAT 4289) by the date determined by their PSP and retains copies of the order and remission approval.

9.3.2 WHEN ARE EXCISABLE GOODS EXEMPT FROM EXCISE DUTY?

Excisable goods are exempt from duty if they are:

• sold for use as ship's or aircraft's stores, [191] or
• subject to remission without application. [192]

What are ship's and aircraft's stores?

Ship's and aircraft's stores are goods for the use of passengers or crew on international journeys or for the service of ships or aircraft on international journeys (e.g. cigarettes for sale to passengers on board a cruise liner).

There are limits on the quantities of excisable tobacco products that are not liable to excise duty as ship's or aircraft stores: [193]

• excisable alcohol beverages other than beer must not be sold to a passenger or crew other than by the glass or by nip
• cigarettes must be sold to passengers or crew in individual packets of not more than 25 sticks or individual tins of not more than 50 sticks
• loose tobacco (e.g. pipe tobacco) must be sold in quantities of not more than 120 grams
• cigars must be sold in individual packets, tins, or boxes of not more than 25 cigars. 

If you supply ship's or aircraft's stores underbond , you must obtain a movement permission to move the goods from the licensed premises to the place of export.

When are excisable goods subject to remission without application?

Excisable goods are subject to remission without application (this effectively means they are exempt from duty) when they are sold by duty free shops for official use but not for trade by [194] the personnel of sea-going vessels of the Royal Australian Navy (RAN) or Australian Military Forces (AMF).

Some restrictions apply to excisable goods for the RAN and AMF:

• The goods must be for consumption by the personnel of sea-going vessels of the RAN or the AMF when:
  • such vessels are in full commission, and
  • the products are consumed on such vessels [195]
• Only certain excisable goods are eligible for this concession, including:
  • tobacco
  • cigars
  • cigarettes
  • ale, port and other beer
  • brandy
  • whisky
  • rum
  • gin, and
  • liqueurs.
• RTDs (for example pre-mixed rum and cola or other mixers in bottles/cans) do not qualify for this concession.

To supply excisable goods under these circumstances, you must first ensure the receiver meets the relevant criteria. For example, you should only accept orders, stating that the goods are for official use, on the official stationery, or official order, of eligible people or organisations. You must keep a copy of this documentation.

You do not have to apply for a remission and you do not have to include these products on an excise return.

9.4 PROCEDURES

9.4.1 HOW DO I APPLY FOR A REMISSION?

An application for a remission must be submitted in writing. Records to substantiate your claims must be maintained and produced when requested. [196]

For remission circumstances 1, 2, or 3 (outlined in Section 9.3.1 - When can I apply for a remission of excise duty?), your application must be submitted within 14 days of the date on which the excise duty was paid. However, this time may be extended to within 12 months of payment depending on your circumstances. [197]

To ensure the excisable goods do not find their way into the Australian domestic market we may wish to inspect or supervise the disposal of the goods. If underbond goods must be destroyed off site, you must apply for a movement permission to move them from the licensed premises to the place of destruction.

Unless excisable goods have been accidentally destroyed, you should contact us before moving or destroying any that are subject to remission. We will provide you with direction and advise if the goods are to be inspected or the destruction supervised.

For more information about movement permissions refer to Chapter 5 - Movement permissions .

To apply for a remission, send us a completed Excise remission (NAT 4289). You can use the Excise remission instructions (NAT 15769) to help you complete this form.

If you are not satisfied with our decision to refuse your remission, you can request a review of our decision by lodging an objection within 60 days.

For more information about your review rights refer to Chapter 10 - Reviews and objections .

9.4.2 HOW DO I GET A PERIODIC SETTLEMENT PERMISSION (PSP)?

If you apply for a storage licence with permission to sell duty free, you can use your application form to indicate whether you need a PSP. You do not need to complete a separate PSP application.

If you originally chose not to have a PSP, contact us and provide us in writing with your:

• licence details (if you have one), and
• reasons for applying for a PSP.

If we approve your PSP, we will notify you in writing within seven days of receiving your request.

A PSP is not transferable to another person and remains in force until revoked.

We may also:

• refuse to grant a PSP
• impose conditions on a PSP, or
• cancel a PSP.

Failure to comply with a condition may result in the cancellation of the PSP. [198] In such an instance, we would take into account a variety of factors, including your compliance history.

A decision to refuse or to cancel a PSP is not reviewable under the objection process. However, there may be other avenues for review, for example, you may seek an informal review of our decision.

For information about your review rights refer to Chapter 10 - Reviews and objections .

For more information about PSPs, contact us by phoning 1300 137 295.

9.4.3 WHAT DOES MY PSP INCLUDE?

Your PSP in relation to excisable goods will include:

1. permission to deliver excisable goods into the Australian domestic market
2. conditions, such as:
   • the type of goods that may be delivered from each premises,
   • quantity limits (if any)
   • record-keeping requirements
3. a schedule listing:
   • one or more premises from which deliveries may be made.

9.4.4 WHAT DO I DO IF I NEED MORE INFORMATION?

If you need more information on remissions and exemptions or PSPs contact us as follows:

• phone 1300 137 295
• fax (03) 9285 1168 , or
• write to us at
  
  Australian Taxation Office
  
  PO Box 3001
  
  PENRITH NSW 2740

We will ordinarily respond to written information requests within 28 days. If we cannot respond within 28 days, we will contact you within 14 days to obtain more information or negotiate an extended response date.

9.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO REMISSIONS AND EXEMPTIONS?

The following are the penalties that may apply after conviction for an offence.

Deliver

If you deliver excisable goods into the Australian domestic market contrary to your permission, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty on the excisable goods. [199]

Evade

If you evade payment of any duty which is payable, the maximum penalty is 5 times the amount of duty on the excisable goods or where a court cannot determine the amount of that duty the penalty is a maximum of 500 units. [200]

False or misleading statements

If you make a false or misleading statement to us, the penalty is a maximum of 50 penalty units. [201]

9. 6 TERMS USED

Excisable goods

Excisable goods are goods on which excise duty is imposed. Excise duty is imposed on goods that are manufactured or produced in Australia and listed in the Schedule to the Excise Tariff Act.

Excisable goods include:

• tobacco
• cigarettes
• beer, and
• spirits.

Excise control

Goods are subject to excise control from the point of manufacture until they have been delivered into the Australian domestic market or for export.

Goods subject to excise control cannot be moved, altered or interfered with except as authorised by the Excise Act.

Excise return

An excise return [202] is the document that you use to advise us the volume of excisable goods that have been delivered into the Australian domestic market.

Penalty units

A penalty unit is specified in section 4AA of the Crimes Act 1914 and, at the time of writing, is $110.

Underbond

This is an expression not found in excise legislation but it is widely used to describe goods that are subject to excise control. Excisable goods that are subject to excise control are commonly referred to as 'underbond goods' or as being 'underbond'. This includes goods that have not yet been delivered into the Australian domestic market and goods moving between premises under a movement permission.

9.7 LEGISLATION (quick reference guide)

In this chapter we have referred to the following legislation:

9.7.1 Excise Act 1901

Section 58 - Entry for home consumption etc.

Section 60 - Persons to keep excisable goods safely etc.

Section 61C - Permission to deliver certain goods for home consumption without entry

Section 78 - Remissions, rebates and refunds

Section 120 - Offences

Section 160A - Ship's stores and aircraft's stores

9.7.2 Excise Regulations 1925

Regulation 50 - Circumstances under which refunds, rebates and remissions are made

Regulation 50A - Other circumstances under which refunds, rebates and remissions are made

Regulation 51 - Requirements for remission, rebate or refund

Regulation 52 - Application for remission, rebate or refund

Regulation 53 - Period for making of application

Schedule 1 - Prescribed circumstances (regulation 50A)

9.7.3 Crimes Act 1914

Section 4AA - Penalty units