when you can apply for a remission, refund or drawback
what happens if you are overpaid a refund or drawback
when fuel products are exempt from excise duty
how to apply for a remission, refund or drawback, and
penalties that can apply to offences in relation to remissions, refunds, drawbacks and exemptions.

7.2 INTRODUCTION

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

A refund is the repayment of duty that has already been paid.

A drawback is a repayment of duty already paid. It is similar to a refund, but applies where duty-paid goods are exported.

In some circumstances the duty you pay on goods may be subject to a complete or partial refund or drawback. [163]

7.3 POLICY AND PRACTICE

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

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

Where the fuel products have deteriorated or been damaged, pillaged, lost or destroyed , [164]

'Pillaged' means to strip of money or goods by open violence, as in war; plunder. [165] This does not cover simple cases of theft.

'Lost' in this context does not simply mean can not be found. For example a tank may spring a leak and it is known that the fuel has drained away. The fuel has been lost and cannot be used by anyone as a fuel.

For more information about payment of duty see Chapter 6 - Payment of duty.

Example 7A

Fuel which is under bond is accidentally destroyed by fire. The owner applies for a remission of duty on the destroyed fuel. If approved this would extinguish the duty liability.

Where goods are not worth the amount of excise duty that would be payable on the goods if delivered into home consumption . [166]

Example 7B

A holder of a manufacturer's licence packages special formula fuel products in 200 litre drums. Before the fuel products are delivered into home consumption they become unsaleable, due to changed packaging requirements resulting from legislative changes made by the State Government relating to the labelling of hazardous goods, and they cannot be sold as it is uneconomical to repackage.

As the fuel products are still subject to excise control when they became unsaleable, the licence holder can apply for a remission of duty on the fuel products. Upon receipt of this application and satisfactory documentary evidence of the destruction of the products or their disposal to, for example, refinery feedstock, the remission will be payable.

Recycled hydraulic oil, brake fluid, transmission oil, transformer oil or heat transfer oil (classified to ETA 15.2), delivered in accordance with your PSP, for which no benefit is payable under the Product Stewardship (Oil) Regulations 2000 and that has been used for the same purpose for which it was used before being recycled . [167]

The fuel is used in the manufacture of goods that are not excisable and is chemically transformed (other than by combustion) in that manufacture . [168]

This circumstance applies where a fuel product is transformed through a chemical reaction (other than combustion) to produce an entirely different substance that is no longer an excisable product, as in some large-scale petrochemical manufacturing processes.

The remission does not apply where fuel is merely mixed with other substances to make products such as solvents, cleaning agents or paint.

7.3.1.1 WHEN ARE EXCISABLE FUEL PRODCUTS SUBJECT TO REMISSION WITHOUT APPLICATION?

Excisable fuel products, to which items 10 and 15 of the excise tariff apply, may be subject to remission without application (this effectively means they are exempt from duty) when they are for official use but not for trade by: [169]

the Governor-General or any member of the Governor-General's family and State Governors or any member of a State Governor's family [170]
the Australian American Foundation and the ANZAC Agency for the Pacific Region of the Commonwealth War Graves Commission [171]
the Government of another country, under an agreement between that Government and the Australian Government [172]
a foreign country under a Status of Forces agreement with the Australian Government [173] ; or
a diplomatic or consular mission and the goods are delivered under your PSP. The fuel in this circumstance can also be for personal use. [174]

Example 7C

A manufacturer receives an order from a diplomatic mission for fuel, for official use. The manufacturer delivers the fuel, into home consumption (to the diplomatic mission), under the terms of their PSP. (The terms of the PSP may require the manufacturer to submit an Excise remission (NAT 4289) to us, after delivery of the fuel.)

If you are uncertain whether a circumstance falls into one of these categories, you should contact us by phone on 1300 137 290 .

To supply fuel products 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 your excise return.

7.3.1.2 REMISSION OF EXCISE DUTY ON LPG AND LNG

An automatic remission of duty is available without application where you are a licensed person and/or a holder of a PSP and deliver LPG or LNG into home consumption (this includes own use) that is not for use, or intended for use, in an internal combustion engine in either a motor vehicle or vessel. [175]

If the LPG or LNG is delivered for mixed use (both non-transport and transport) and is delivered into the same tank then a remission cannot apply. This is also the case if you do not know the end use of the LPG or LNG.

The remission applies at the time the LPG or LNG is delivered.

For more information about Periodic settlement permissions refer to Chapter 6 - Payment of duty .

Example 7D: LPG delivered under settlement permission

Elizabeth's business is licensed for excise purposes. It supplies LPG to Kathleen's business for the purposes of heating during the 2014-2015 financial year. As Kathleen will not be using the LPG for transport purpose the remission applies and Elizabeth will not need to pay duty on the LPG.

Example 7E: LPG delivered for mixed use

Aaron manufactures LPG. Aaron delivers the LPG to Christopher in a bulk tank for transport and non-transport use. The LPG is excisable. As Aaron supplies the LPG to Christopher for mixed use he cannot apply a remission to the LPG.

This means that Aaron must pay excise duty at the transport rate in relation to all the LPG supplied to Christopher. Christopher may be entitled to a fuel tax credit depending on his use of the fuel.

Example 7F: LPG delivered for transport use by a distributor

Huey's business is licensed for excise purposes and supplies LPG to a site specified in a manufacturers licence held by Daisy's Distributors. Daisy holds a movement permission that allows the LPG to move from Huey's licensed site without duty being paid. Daisy's business distributes the LPG to both transport and non-transport customers. Where Daisy distributes the LPG to service stations and trucking companies for transport purposes, Daisy will be required to pay duty on the fuel and no remission will be available.

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

7.3.1.3 NOTICE REQUIREMENTS FOR LPG DELIVERED UNDER REMISSION

If you hold a manufacturer or storage licence and you supply or sell LPG to which a remission applies at the time of supply or sale you must give a notice to your customer. [176]

If you on-sell or on-supply LPG on which a remission applied, and at the time of the on-sale or on-supply a remission continues to apply, you must give a notice to your customer that a remission applied to the LPG. [177]

The notice must include the words:

'Not to be used, or supplied, for transport use. Penalties apply'. [178]

The phrase 'excisable LPG use' means to use LPG in a system for supplying fuel to an internal combustion engine of either a motor vehicle or a vessel, either directly or by filling another tank connected to such an engine.

The phrase 'excisable LPG use' does not include the use of LPG for a vehicle that is designed to move goods with a forklift and is for use primarily off public roads.

You are not required to give notice for LPG you supply:

in, or into, a 210 kilogram container; or
to a residential premises and some or all of the LPG is not supplied for the purpose of carrying on an enterprise. [179]

7.3.1.4 PENALTY OR OFFENCE RELATING TO LPG DELIVERED UNDER REMISSION

You may be subject to a penalty of 1 penalty unit if you do not give the notice when required. [180]

Penalty for using LPG subject to remission for an excisable LPG use

You may be subject to a demand for payment from us if:

LPG is sold or supplied to you; and
you use the LPG for an excisable LPG use; and
an LPG remission applied to the LPG at the time of the use. [181]

The amount demanded will be equal to 2 times the amount of excise duty that would be payable on the LGP when used for an excisable LPG use. [182]

Penalty for unlawfully selling LPG subject to remission that is used for an excisable LPG use

You commit an offence if:

you intentionally sell LPG; and
you know that, or are reckless as to whether, the LPG will be used for an excisable LPG use, and
the LPG is used for an excisable LPG use; and
you did not pay excise duty on the LPG as a remission applied to the LPG at the time of the use. [183]

The penalty is 2 years imprisonment or the greater of:

500 penalty units; and
5 times the amount of duty that would be payable on the LPG at the rate of duty payable on excisable LPG on the day the LGP was used. [184]

For more information about offences and penalties refer to Chapter 9 - Offences .

7.3.2 WHEN CAN I APPLY FOR A REFUND OF EXCISE DUTY?

You can apply for a refund of excise duty paid on excisable fuel products if the following circumstances apply:

Duty has been paid on fuel that was lost or destroyed.

Duty has been paid on excisable fuel products, however it is later found that, while the goods were subject to excise control (i.e. while they were at the licensed site), they deteriorated or had been damaged, pillaged, lost or destroyed, [185]

Duty-paid fuel products, while the goods are subject to excise control, are not worth the amount of excise duty paid. [186]

Example 7G

A holder of a manufacturer licence who does not have a PSP pays the excise duty on fuel products, being 200 litre drums of solvent, in accordance with a pre-payment return. They receive a delivery authority . Before the fuel products are removed from the licensed premises they become unsaleable, due to changed packaging requirements resulting from legislative changes made by the State Government relating to the labelling of hazardous goods, and the fuel cannot be sold as it is uneconomical to repackage.

As the fuel products were still subject to excise control when they became unsaleable, the licence holder can apply for a refund of duty on the fuel products. As a consequence an application for a remission would be required to allow the licence holder to destroy the goods and remove from their stock records. Upon receipt of this application and satisfactory documentary evidence of the destruction of the fuel products the refund will be paid.

Duty has been paid on LPG for non-transport use through manifest error of fact or patent misconception of the law

LPG that is sold for non-transport use is incorrectly duty paid as the distributor did not apply the remission. This only applies if the LPG was sold to a person for a price that excluded the excise duty amount. If it included an amount for excise duty a refund would only be payable if an amount equal to the excise duty has been refunded or credited to the person. [187]

This is to avoid the end user claiming a fuel tax credit on the LPG in addition to a refund claim being made by the supplier.

Duty has been paid on goods (other than gaseous fuel) through manifest error of fact or patent misconception of the law. [188]

This circumstance applies to an error that is evident, obvious or apparent and also in situations where duty has been paid for goods entering home consumption that are not in fact excisable. In both cases a refund of the duty paid would be payable.

Example 7H

The system used by an entity to record deliveries into home consumption and calculate their duty liability on a weekly basis, incorrectly identifies a sale of kerosene for aviation use as tariff item 10.16 and pays excise duty at a rate of $0.389 per litre rather than the applicable rate of $0.03556 per litre. The entity identifies the error after the end of the settlement period. It is eligible to apply for a refund for the difference between the duty paid and the duty payable.

Duty-paid goods have been taken up as ship's stores or aircraft's stores . [189]

Ship's stores on ships undertaking an international voyage and aircraft stores on aircraft undertaking international flights are not subject to excise duty. Where duty has been paid and the excisable fuel products are subsequently re-directed for use on ships or aircraft travelling overseas (for example bunker fuel), this refund circumstance may apply. As fuel that is used to power a ship or aircraft falls within the definition of ship's and aircraft's stores, a refund is payable on excise duty paid on fuel that is subsequently used in overseas ships and international aircraft. This circumstance does not apply where a fuel tax credit entitlement exists.

After duty has been paid on fuel, a bylaw is made under Part XV of the Excise Act and the effect is that duty is not payable or is payable at a reduced rate, on those goods. A refund of the duty or the difference in the duty rates is payable. [190]

Goods including fuel, gaseous fuel, oil and grease that are returned to a manufacturer or to a warehouse . [191]

All goods classified to item 10 or 15 of the excise tariff, other than goods that have been used.

The circumstance applies to petrol that is returned to a licensed petroleum terminal. Duty may be refunded when the petrol returns to underbond stock holdings. It does not have to be returned to the original manufacturer.

Returns can occur for a number of reasons, including:

contamination
over delivery, or
vapour recovery. This relates to vapour that is pumped out of a tank at a service station and captured within tanks on the delivery truck when fuel is delivered. The vapour is extracted from the tanker back at the licensed premises and is converted back to a liquid form and will eventually form part of another delivery.

Duty has been paid on excisable fuel products to which items 10 and 15 of the excise tariff apply, and they are sold in the following circumstances:

for the official or personal use of diplomatic or consular staff of foreign countries [192]
for use by the Government of another country, under an agreement between that Government and the Australian Government and not for trade [193]
for the official use of a foreign country under a Status of Forces agreement with the Australian Government and not for resale, [194] or
for the official of an international organisation or personal use of the holder of a high office of an international organisation to which the International Organisations (Privileges and Immunities) Act 1963 [195]

7.3.3 WHEN CAN I APPLY FOR A DRAWBACK OF EXCISE DUTY?

You can apply for a drawback if you export fuel products that have had excise duty paid on them. [197]

Drawback of duty is not payable in the following circumstances:

the goods are stabilized crude petroleum oil or condensate there is no drawback of duty paid under items 20 or 21 of the Schedule to the Excise Tariff (Schedule) [198]
the goods are liquid petroleum obtained from naturally occurring petroleum gas [199]
if the excise duty has been refunded on the exported fuel products [200]
if after exportation the fuel products are re-landed in Australia, [201] or
the exported goods are relevant fuel which an entity has or had an entitlement to a fuel tax credit under the Fuel Tax Act 2006 , or does or did not have an increasing fuel tax adjustment for the fuel. [202]

We will only pay a drawback if: [203]

prior to the exportation, you advise us via notice that you intend to claim a drawback (We can exempt you from this requirement, in writing, either on all claims for drawback or any particular claim. [204] )
before exportation of the excisable fuel products on which duty has been paid, the goods are available for inspection by us, and
you keep records including those that show:
- that duty was paid on the fuel products (for example invoice), and
- the fuel products were exported (for example, an export declaration number or bill of lading)
you lodge a drawback claim in the approved form no later than 12 months after the fuel products were exported,
the claim sets out the amount of drawback and a statement that the goods have not been, or are not intended to be re-landed in Australia, and
the amount of the claim or an aggregate of claims is at least $50.

The amount of the drawback will not exceed the amount of excise duty that was paid. [205]

Example 7I

A fuel contractor arranges for duty-paid diesel to be sent to researchers studying porpoises on a remote Fijian island. The diesel is stored in 208 litre (55 US gallon) drums and stowed in the cargo hold of a ship. The contractor buys 20,000 litres of duty-paid diesel fuel from a fuel depot and arranges the shipping. The amount of excise duty on the fuel is $7,780.00 (20,000 x $0.389).

The contractor applies for a drawback of the duty paid on the fuel. To support the application, they provide the Tax Office with a copy of the invoice for the fuel purchase, and a copy of the Certificate of Clearance stamped and issued by the Australian Customs and Border Protection Service.

Fuel used in an overseas ship and international aircraft that meets the definition of ship's stores and aircraft's stores (fuel bunkers) is not considered to be exported. In a situation where these fuels are delivered duty paid to overseas ships or international aircraft an entitlement to a fuel tax credit or a refund of the excise duty may arise.

For more information about fuel bunkers refer to the Bunker fuel and commercial shipping guide .

7.3.4 WHAT HAPPENS IF I AM OVERPAID A REFUND OR DRAWBACK?

If we overpay you by way of a refund or drawback then you must pay the overpaid amount back. We can demand that you pay back the amount and if you do not repay the amount within the time we specify in the demand we can recover the amount through the courts as a debt due to the Commonwealth. [206]

7.3.5 WHEN ARE EXCISABLE FUEL PRODUCTS EXEMPT FROM EXCISE DUTY?

Excisable fuel products are exempt from duty if they are:

exported
sold for use as ship's or aircraft's stores [207]
with our approval, delivered as small samples, [208] or
subject to remission without application. [209]

What are ship's and aircraft's stores?

Ship's and aircraft's stores are goods for the use of passengers or crew on an international journey or for the service of ships or aircraft on an international journey.It includes fuel used to power the overseas ship and international aircraft. [210]

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.

Can I deliver samples without payment of duty?

Yes, you may be able to deliver small samples without payment of duty and without entry. You must apply to us for approval and your application must:

be in writing
specify who the sample is for
specify the quantity for approval, and
specify the purpose of the sample.

In determining what constitutes a sample we would consider each application on a case by case basis, but as a guide the sample volume would need to be less than 10 litres.

You do not include approved samples in your excise return ; however, you must keep records of any samples you deliver.

To apply for approval, send your application to us by:

faxing to 1300 130 916
email us at ATO-EXC-Petroleum@ato.gov.au , or
posting to

Australian Taxation Office

PO Box 3514

ALBURY NSW 2640

7.3.5.1 WHEN IS CNG, LPG and LNG EXEMPT FROM EXCISE DUTY?

CNG

CNG is exempt from duty if it was compressed:

for use other than as a fuel for a motor vehicle; or [211]
other than in the course of carrying on an enterprise; or [212]
for use as a fuel for a forklift vehicle that is used primarily off public roads; or [213]
- at a residential premises; and
- the rate at which the gas was compressed at those premises is not more than 10 kilograms of compressed natural gas per hour; and
- the gas is not sold or otherwise supplied in the course of carrying on an enterprise. This gas can be used as a fuel for a motor vehicle. [214]

The phrase 'in the course of carrying on an enterprise' has the same meaning as when it is used in the A New Tax System (Goods and Services Tax) Act 1999 .

A 'residential premises' has the same meaning as given in the A New Tax System (Goods and Services Tax) Act 1999 .

LPG and LNG

LPG and LNG are exempt from duty if you are a licensed manufacturer and you use the fuel at the premises specified in the licence in the process of manufacturing:

petroleum condensate or stabilised crude petroleum oil; or
liquefied petroleum gas, liquefied natural gas or other hydrocarbons. [215]

7.4 PROCEDURES

7.4.1 HOW DO I APPLY FOR A REMISSION OR REFUND?

An application for a remission (excluding automatic remissions [216] ) or refund must be submitted in the approved form and state the nature and particulars of the claim. Records to substantiate your claims must be maintained and produced when requested. [217]

You must lodge your refund application within 12 months after the day when the excise duty was paid for the following refund circumstances: [218]

fuel while subject to the CEO's control that has deteriorated, been damaged, pillaged, lost or destroyed, or become unfit for human consumption
fuel while subject to the CEO's control that is not worth the amount of duty paid on it
duty was paid on goods (other than gaseous fuels) through manifest error of fact or patent misconception of the law.
LPG and LNG that is sold for non-transport use is incorrectly duty paid as the distributor did not apply the remission. This only applies if the LPG was sold to a person for a price that excluded the excise duty amount. If it included an amount for excise duty a refund would only be payable if an amount equal to the excise duty has been refunded or credited to the person
fuel supplied as bunker fuel to a vessel or aircraft that undertakes an international voyage or flight that does not create an entitlement to a fuel tax credit.

For all other items listed in the table at Clause 1 of Schedule 1 (excluding those dealing specifically with stabilized crude oil and condensate) there is no time limit for lodging your application for refund.

To ensure the excisable fuel products that are the subject of a remission due to deterioration or contamination, do not find their way into home consumption 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. With permission you may be able to move goods that have been delivered into home consumption and then the subject of a refund and remission claim, directly to a non-licensed premise for destruction. [219]

Unless fuel products have been accidentally destroyed, you should contact us before moving or destroying any that are subject to remission or refund. 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 .

You can elect to have a refund credited to your excise account or paid directly into your bank account.

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.

To apply for a refund, send us a completed Excise refund (NAT 4288). You can use the Excise refund instructions (NAT 15771) to help you complete this form. Applications can also be made on company letterhead as long as all the relevant information is provided.

If you are not satisfied with our decision to refuse your refund or 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 8 - Reviews and objections .

7.4.2 HOW DO I APPLY FOR A DRAWBACK?

To apply for a drawback of duty, send us a completed Excise drawback (NAT 4287). You can use the Excise drawback instructions (NAT 15688) to help you complete this form. Applications can also be made on company letterhead as long as all the relevant information is provided.

Your drawback application must be received not later than 12 months after the day on which the goods were exported. [220]

If we refuse to pay your drawback and you are not satisfied with our decision 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 8 - Reviews and objections .

7.4.3 WHAT DO I DO IF I NEED MORE INFORMATION?

If you need more information on remissions, refunds, drawbacks and exemptions contact us as follows:

phone 1300 137 290
fax 1300 130 916 ,
email us at ATO-EXC-Petroleum@ato.gov.au or
write to us at

Australian Taxation Office

PO Box 3514

ALBURY NSW 2640

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.

7.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO REMISSIONS, REFUNDS, DRAWBACKS AND EXEMPTIONS?

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

Evade

If you evade payment of any duty which is payable, the maximum penalty is 5 times the amount of duty on the excisable fuel products or where a court cannot determine the amount of that duty the penalty is a maximum of 500 units. [221]

False or misleading statements

If you make a false or misleading statement, or an omission from a statement in respect of duty payable on particular goods, to us, a penalty not exceeding the sum of 50 penalty units and twice the amount of duty payable on those goods. [222]

7.6 TERMS USED

Excisable fuel products

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.

As these guidelines deal with fuel products, we have used the term excisable fuel products.

Excisable fuel products include:

petrol
diesel
renewable diesel
crude petroleum oil
condensate
heating oil
kerosene
fuel ethanol,
biodiesel
compressed natural gas (CNG)
liquefied natural gas (LNG); and
liquefied petroleum gas (LPG).

Excise control

Goods are subject to excise control from the point of manufacture until they have been delivered into home consumption 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 [223] is the document that you use to advise us:

the volume of excisable fuel products that you have delivered into home consumption during the period designated on your PSP, or
the volume of excisable fuel products that you wish to deliver into home consumption following approval.

Home Consumption [224]

'Home consumption' is the term used in the Excise Act and this guide to describe when excisable fuel products are released into the Australian domestic market for consumption. The term used in the legislation is 'deliver for home consumption'.

Normally this will be by delivering the goods away from licensed premises but includes using those goods within the licensed premises (for example using fuel to run equipment in your licensed premises). It does not include goods delivered for export or the movement of goods underbond (see definition below) to another licensed site.

The term 'home consumption' is not defined in the Excise Act and there is no definitive case law that looks at the issue in question. However there are several cases where issues closely related to it are considered. [225]

The conclusion drawn from those cases is that 'home consumption' refers to the destination of goods as being within Australia as opposed to exporting them.

Penalty units

A penalty unit is specified in section 4AA of the Crimes Act 1914 and, at the time of writing, is $210.

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 home consumption and goods moving between premises under a movement permission.

7.7 LEGISLATION (quick reference guide)

In this chapter we have referred to the following legislation:

Excise guidelines for the fuel industry

	Date:	Version:
	1 July 2006	Original document
	1 April 2015	Updated document
	12 July 2017	Updated document
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	4 June 2021	Updated document
	1 July 2024	Current document

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Excise guidelines for the fuel industry

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07 REMISSIONS, REFUNDS, DRAWBACKS & EXEMPTIONS

7.1 PURPOSE