Excise guidelines for the tobacco industry

2.2.1 WHY IS THERE A LICENSING REGIME? The Excise duty attached to excisable tobacco products forms a significant component of the overall value of the goods. Licensing of tobacco producers and dealers was introduced to combat the illicit trade in tobacco which threatened to erode the revenue base. 2.2.2 WHAT IS A LICENCE? A licence is an approval or authorisation to enable you to undertake activities as specified in the licence. If you undertake these activities without a licence or contravene your licence you are committing an offence and may be prosecuted. A licence is issued to a specific entity and specifies the site where the activities may be undertaken. This may require you to have more than one licence. Licences can be issued to:

individuals
partnerships and companies in their own right, and
individuals and companies in their capacity as trustees.

There may be different licensing processes depending on the type of entity applying for the licence.

A licence is not transferable.

2.3 POLICY AND PRACTICE

2.3.1 DIFFERENT LICENCE TYPES There are four licence types:

Producer
Dealer
Manufacturer, and
Storage.

Producer licence

A producer is a licensed grower of tobacco seed, plant or leaf. To be able to produce tobacco seed, plant or leaf, you must hold a valid producer licence. You cannot produce tobacco seed, plant or leaf at premises that are not specified in your licence. ^{^[14]} Produce includes all the activities of growing tobacco plants such as germinating seeds, growing seedlings, planting out, harvesting seeds for future seasons and harvesting the leaves, up to and including curing the leaf as stripped from the plant. [15] You cannot grow or plant tobacco seed or plant, or hold tobacco seed, plant or leaf in anticipation of acquiring a producer licence. This means that you cannot produce samples to market to potential buyers if you do not hold a licence, nor can you store tobacco seed or seedlings. A producer licence also allows you to sell tobacco seed, plant or leaf that you produce to:

licensed dealers
licensed manufacturers, or
other licensed producers.

Conditions may be imposed on a producer's licence including requirements around storage and in relation to persons participating in the business. Typically those who would require a producer licence include:

farmers who grow tobacco leaf for sale to licensed manufacturers, and
nurseries growing tobacco seedlings for sale to licensed producers.

Dealer licence

To be able to deal in tobacco seed, plant or leaf, you must hold a valid dealer licence. You cannot deal in tobacco seed, plant or leaf at premises that are not specified in your licence. ^{^[16]} Deal includes buying, selling, storing, distributing and importing. You may also need a dealer licence if you wish to display tobacco seed or plant; for example, if you operate a museum. You cannot deal in tobacco seed, plant or leaf in anticipation of acquiring a dealer licence. A dealer licence also allows you to buy from or sell tobacco seed, plant or leaf to:

licensed producers
licensed manufacturers, or
other licensed dealers.

Conditions may be imposed on a dealer licence including requirements for storage and in relation to persons participating in the business.

If you are a licensed producer you do not need a dealer licence to:

buy tobacco seed or plant, or
sell tobacco seed, plants or leaf. [17]

If you are a licensed manufacturer you do not need a dealer licence to buy tobacco leaf from a producer or dealer or to import tobacco leaf.

Manufacturer licence

To manufacture excisable tobacco products, the Excise Act requires you to be a licensed manufacturer [18] and that the goods are manufactured at licensed premises, using Australian grown and/or imported tobacco leaf, [19] in accordance with the conditions specified on your manufacturer licence. [20] The term 'manufacture' is defined in section 4 of the Excise Act and includes all processes (that is, operations or actions) used in the manufacture of excisable goods. The definition in the Excise Act is an inclusive one, that is, it includes some processes that might otherwise not generally be considered as manufacture. However, the definition itself refers to the processes that are used in the manufacture of excisable goods It is, therefore, relevant to examine the ordinary meaning of the word and determine its appropriateness for the purposes of the Excise Act. The courts have extensively examined the meaning of 'manufacture' in the context of legislation other than the Excise Act. Whilst it is not possible to directly adopt judicial interpretation of the word as it appears in other legislation, these cases do provide guidance. In summary, the courts have given the word 'manufacture' the meaning of either producing a thing which is different from its inputs, or bringing a new article into existence by skill or knowledge. [21] The courts considered processes that involved the application of knowledge, the application of skill, experience, services or labour which results in the conversion of materials into a saleable commodity may fall within the definition of 'manufacture'. The commodity must be different from the inputs which went into making it. In an excise context, the conversion may result in a change in physical and/or chemical properties of goods, for example, in colour, shape, density, viscosity, distillation temperature, composition, texture, aroma or taste. In relation to tobacco the Excise Act excludes the curing process from being manufacture and the Schedule to the Excise Tariff Act defines 'tobacco' as being tobacco leaf subjected to any process other than curing the leaf as stripped from the plant. We consider that these common activities in relation to tobacco are manufacture:

threshing tobacco leaf
conditioning
blending
cutting, and
making tobacco products.

The following activities are examples of processes that are 'excise manufacture':

Threshed tobacco leaf is cut and treated with heat and moisture and combined with filters and paper to form cigarettes.
Cured tobacco leaves are cut to form 'roll your own' tobacco.
Cured tobacco leaf is threshed to separate the lamina from the stem. The lamina is called 'cut rag'.
Cured tobacco leaves are rolled together to form a cigar.

The following activities are examples of processes that are not 'excise manufacture'.

Tobacco leaf, as stripped from the plant, is cured to convert it into leaf tobacco. [22]
A person rolls a cigarette at home using papers and 'roll your own' tobacco on which duty has been paid.

You cannot commence to manufacture excisable tobacco products without a licence. This means that you cannot test your manufacturing equipment or produce samples to market to potential buyers if you do not hold a licence. Imported whole or threshed leaf is subject to customs duty at the same rate as loose manufactured tobacco. If you intend to use imported whole or threshed leaf in the manufacture of excisable products you can avoid paying the customs duty if you follow the provisions in the Customs Act. If you have any questions regarding this you should contact the Australian Customs Service. However, in general, the provisions provide that if your licensed excise premises is also licensed as a Customs warehouse you can enter the imported whole or threshed leaf for warehousing and then use the imported leaf to manufacture excisable goods. The liability to pay the customs duty on the imported whole or threshed leaf is extinguished upon the manufacture of excisable goods. [23] You will then be liable to pay excise duty on the excisable tobacco products. You need permission to move any tobacco leaf so, if you use imported tobacco leaf, you need permission to move it from the place of importation to your manufacturing premises. [24]

If you use imported leaf, you require permission to import the leaf, as it is otherwise a prohibited import under the Customs Prohibited Import Regulations. [25]

You can only manufacture goods at the premises specified on your licence. [26] We may also give you written directions in regard to what parts of your factory any manufacturing process is to be carried on and inputs used in manufacture, and excisable tobacco products, respectively are to be kept. [27]

If you hold a valid manufacturer licence, you do not need a separate storage licence to store goods that you manufacture at those premises. The storage of your manufactured goods, whilst not manufacture in itself, is a normal part of the chain of events in manufacturing goods. It does not, however, include storing excisable goods manufactured by someone else. To store goods manufactured by someone else you will need a storage licence.

A manufacturer licence allows you to sell tobacco leaf to a dealer or manufacturer who is also licensed under the Excise Act.

Storage licence

If you have a manufacturer licence and wish to store your excisable tobacco products underbond at a place that is not specified in your licence you will require a separate storage licence for that place. If you are in the business of wholesaling and distribution you may wish to store underbond excisable tobacco products (whether owned by you or someone else). In either case you would require a storage licence. Even if you are not the owner of the excisable tobacco products, you are still responsible for the security of the goods and may be liable to pay an amount equivalent to the duty if the excisable goods are not kept safely or are not satisfactorily accounted for. A storage licence will specify the type of excisable tobacco products and the location. It will also specify the activities, if any, you can undertake in relation to those goods, for example re-packaging [28] and whose excisable goods you can store, for example we could limit it to goods you own, or to goods owned by certain people.

You do not need a storage licence to store tobacco seed, plant and leaf as they do not become excisable until they have passed the first stage of manufacture. However you do need a producer or dealer licence to have tobacco seed, plant or leaf.

2.3.2 WHAT ARE MY RESPONSIBILITIES AS A LICENCE HOLDER? You are responsible for the secure storage of all tobacco seed, plant and leaf and excisable tobacco products held on your premises or under your control and must keep or store tobacco seed, plant or leaf and excisable tobacco products only at premises that are specified in your licence. ^{^[29]} If you are a manufacturer, this includes stalks, refuse, clippings or waste arising from the manufacturing process. If you lose any tobacco leaf, you may be liable to pay an amount equivalent to the duty that would have been payable had that tobacco leaf been manufactured into tobacco products. [30] The amount of such a liability can be substantial as the rate of excise duty applicable is over $300 per kilogram of tobacco content. You may be responsible for paying an amount equal to the excise duty that would have been payable on any stolen, missing or unaccounted for excisable tobacco products. [31] Where, after we take stock of excisable tobacco products manufactured and the materials you use in the manufacturing process it appears to us, that not all the duty that should have been paid has been paid, you must pay the difference between the amount paid and the amount that should have been paid. [32]

If you wish to destroy any excisable tobacco products, you must first obtain permission from us to do so.

You must not move tobacco seed, plant or leaf, or excisable tobacco products, without approval from us. This includes moving tobacco seed, plant or leaf, or excisable tobacco products from your licensed premises to any other location or for export. ^{^[33]}

For more information about obtaining permission to move tobacco refer to chapter 5 - Movement permissions.

If you are moving tobacco leaf away from the place specified on your licence, you must ensure that the tobacco leaf has a tobacco bale label attached at all times that the tobacco leaf is not at a licensed place, unless we approve otherwise in writing. [34]

You must also obtain permission from us before moving tobacco leaf, [35] or stalks, refuse, clippings or waste arising from the manufacturing process, [36] for destruction.

You are also responsible for ensuring that you comply with the Excise Act and all conditions of your licence. [37] You may deliver Australian tobacco leaf for a purpose such as medical, scientific, horticultural or agricultural use upon receipt of an approval from us. [38] You must keep, retain and produce records in accordance with a direction under section 50 of the Excise Act. If you are a manufacturer, you will also need to:

ensure tobacco products are only delivered into the Australian domestic market with appropriate authority, such as in accordance with a periodic settlement permission or Delivery authority ^{^[39]}
pay the correct amount of excise duty ^{^[40]}
provide all reasonable facilities to enable us to exercise our powers under the Excise Act [41]
provide sufficient lights, correct weights and scales, and all labour necessary for
- weighing material received into your factory
- weighing all excisable goods manufactured in your factory, and
- taking stock of all material and excisable goods contained in your factory, ^{^[42]} and
have no more than 30% moisture content in the manufactured tobacco product, [43] which is determined by drying it at a temperature of 100 degrees Celsius. [44]

If you have a storage licence, you will also need to:

ensure tobacco products are only delivered into the Australian domestic market with appropriate authority, such as in accordance with a periodic settlement permission or Delivery authority, ^{^[45]} and
pay the correct amount of excise duty [46] if you are the owner or manufacturer.

For more information about duty liability and methods of payment refer to chapter 6 - Payment of duty .

2.3.3 WHAT ELSE CAN YOU DO? Access We have the right to enter your licensed premises at any time and can examine and take account of all the goods at the premises. [47] Note: we will usually only seek to enter your premises during normal business hours. Stop vehicles We can stop any vehicle leaving your licensed premises and check that there is proper documentation for tobacco leaf or excisable tobacco products leaving the premises. We can question the driver about any goods in the vehicle. We can direct that the vehicle be unloaded and goods taken to particular parts of the premises for further examination. We must not detain a vehicle for longer than is necessary to do the checking. [48] Search vehicles We can stop and search any vehicle (not just vehicles leaving a licensed premises) without a warrant if we have reasonable grounds for believing that the vehicle contains tobacco leaf or excisable tobacco products and that the vehicle has been used, is being used or will be used in the commission of an offence under the Excise Act (and certain offences in the Crimes Act 1914 [49] and Criminal Code [50] relating to accessory after the fact, attempt to commit an offence, aid and abet someone to commit an offence and conspiracy to commit an offence). [51] Examine goods We can open packages and examine, weigh, mark and seal any excisable tobacco products that are subject to excise control and, if you are a manufacturer, lock up, seal, mark or fasten any plant in or on your factory. [52] We can also:

supervise the manufacture of excisable tobacco products, [53] and
take samples of materials, partly manufactured excisable tobacco products and excisable tobacco products subject to excise control, and tobacco products that we have reasonable grounds for suspecting are excisable tobacco products on which duty has not been paid [54]

2.3.4 WHAT RECORDS DO I NEED TO KEEP? Unlike other taxation laws the Excise Act does not have a general record keeping provision. The Excise Act does provide that a licence holder shall:

keep such records and furnish such returns as directed
keep these records for the period directed, and
on demand, produce those records to us. [55]

Any such direction will be in writing and included with your licence. We can amend this direction at any time and will provide written notification of this to you. If you cease to hold an excise licence you must still keep all records of your previously licensed activities. Records must be kept for the period of time as directed. The following are examples of the records that we may direct you to keep: If you are a producer, details of:

number of hectares on which you grow tobacco leaf
quantity of tobacco leaf you harvest
packing dates
kiln or barn numbers
number of racks or clamps
pick numbers
date unloaded from the kiln or barn
number of bales made
Tax Office bale label number
quantity (in kilos) of loose cured tobacco leaf in storage (in bags or slings)
number of bales entered into your storage shed
number of bales sent to sale
date bales are sent to sale
total number of bales in storage, and
any tobacco leaf lost, including
- the date of the loss
- the cause of the loss
- the quantity of tobacco leaf lost
- who the loss was reported to, and
- the Tax Office comment/verification.

We have created the 'Tobacco producer's record book' [56] to help you meet your record keeping obligations. If you are a dealer, details of:

all tobacco seed plant or leaf purchased
all tobacco seed plant or leaf sold, and
imported tobacco leaf.

If you are a manufacturer, details of:

all tobacco leaf received at your licensed premises
all tobacco leaf and excisable goods
held in your licensed premises
the amount of excisable tobacco produced showing all inputs, outputs and waste
all deliveries from your licensed premises
all duty payments and excise returns
any refunds and remissions, and
destruction of any waste materials.

If you have a storage licence, details of:

stock received
stock removed/delivered, including details of duty payments, underbond movements, refunds, remissions and destructions
stock on hand, and
entities and dates relating to the goods received at and delivered from the premises.

2.3.5 HOW LONG IS MY LICENCE VALID FOR? Your licence will state its expiry date. When first issued, the licence is valid until the next 30 September two years after the anniversary of the day it is granted. [57]

Example: If we grant a licence on 15 September 2007, it will expire on 30 September 2009. If we grant a licence on 15 October 2007, it will expire on 30 September 2010.

Upon renewal a licence is valid for a further three years starting from the day after the date of expiry of the existing licence, that is, 1 October three years from the year the existing licence expires. 2.3.6 IS MY LICENCE TRANSFERABLE? Generally you cannot transfer your licence to another individual, business entity or premises. The proposed new licence holder must apply for a new licence. You must also request cancellation of your current licence if you are no longer carrying out an excise activity. It is important that you advise us of any change in advance of it taking effect. The exception to the above rule arises when a licence holder dies. If this is the case, the licence is taken to be transferred to the person's legal personal representative. This allows for the finalisation of the affairs and, unless cancelled earlier, the licence is automatically cancelled 3 months after the licence holder died. [58]

For more information about cancelling licences refer to chapter 4 - Licensing: suspension & cancellation .

2.3.7 CAN MY LICENSING INFORMATION BE DISCLOSED? As well as the protection provided by the Privacy Act, the tax laws have secrecy provisions about using and disclosing taxpayer information. We can only look at, record, discuss or disclose information about you when it is a necessary part of our work, or where the law specifies that we may. Subsection 159(3) of the Excise Act allows us to record or disclose information about you in certain circumstances. For example, the Excise Act specifically allows us to disclose information about you to the Australian Customs Service. In relation to licensing information, the Excise Act specifically allows us to disclose information about:

whether another person holds a current excise licence, and
any conditions that apply to their licence.

Sub-section 159(3A) provides that such information may be disclosed:

to a person dealing or proposing to deal with another person in relation to goods subject to excise control, and
provided we are satisfied that disclosure is necessary for the purposes of ensuring the dealing or proposed dealing is in accordance with excise law.

Example You need to find additional storage space for your finished tobacco products and, therefore, need to check that the entity who offers to warehouse your products has a licence to store excisable tobacco products.

If we decide that the disclosure is necessary, we must provide the information in writing to the person who requires it. If the matter is urgent, we may advise by phone. However, we must later confirm the information by letter or fax. A disclosure may be initiated by us or by you when you request information. Anyone who receives such information should use it only for the purpose for which it was given. Any other use may be unlawful. Note: The Privacy Act 1988 imposes certain obligations on you concerning the privacy of information that you have received about an individual. Further information can be obtained from the Office of the Federal Privacy Commissioner at www.privacy.gov.au. Our decision in relation to the disclosure of protected information is not a reviewable decision. However you have the right to make a complaint to the Commonwealth Ombudsman about a range of administrative actions we take or the Privacy Commissioner if you think we have breached the Privacy Act in dealing with your personal information.

For information about your review rights refer to chapter 8 - Reviews and objections .

2.4 PROCEDURES

2.4.1 HOW DO I REGISTER FOR EXCISE? You must register for excise before you can be issued with a licence to produce, store, deal in, or manufacture excisable tobacco products. While it is not compulsory to provide an ABN or TFN for registration, it will help us to process your application. If you need an ABN, you can register online at www.abr.gov.au

To register for excise, complete an Application for excise registration (NAT 7103).

2.4.2 HOW DO I APPLY FOR A LICENCE? If you would like to apply for a licence, you should:

contact us, and
lodge an application form together with all the required supporting documents.

To contact us phone 1300 137 295 . Our staff will:

discuss your particular circumstances with you
give you advice about the appropriate licence or licences
explain how to apply
explain your ongoing obligations as a licence holder, and
provide you with a licence application form.

There is no charge for an excise licence.

How do I lodge an application?

You need to complete the relevant form to apply for a producer, dealer, manufacturer or storage licence. [59] Before lodging your application form, make sure you have included the required supporting documents. Your application form contains information to help you work out which supporting documents you must provide. You may also need to complete other excise forms, depending upon your proposed activities. Supporting documents include:

an accurate plan of the premises that clearly indicates the area for production, dealing, manufacture or storage
a Consent to obtain information - individual (NAT 7112) form, or
a Consent to obtain information - company (NAT 7106) form
a Consent to criminal history record check (NAT 16358), and
an application for permission to move underbond goods.

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

To lodge your completed application form and supporting documents:

fax them to us on (03) 9285 1168 , or
post them to

Excise Licensing Group

Australian Taxation Office

GPO Box 2318

ADELAIDE, SA, 5001

You must not manufacture or store excisable goods, or produce or deal in tobacco seed, plant or leaf, before your licence has been granted. [60]

We will process your application within 28 days of the date we receive all required information.

2.4.3 HOW DO I CHANGE MY LICENCE DETAILS? We can amend your licence for changes that do not involve a change of entity or physical location. This includes a change of:

business name (that is your trading name)
postal address, or
street name or property address made by a relevant authority.

A change in composition of a partnership does not affect the continuity of that partnership. Any one or more of the partners may act on behalf of the partnership in notifying changes. [61] You must advise us of any of these changes within 30 days. We will then provide you with an amended licence. 2.4.4 WHAT DO I DO IF I NEED MORE INFORMATION? If you need more information on licensing matters 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.

2.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO LICENCES?

The following are the penalties that may apply after conviction for an offence. Produce If you produce tobacco seed or plant without a producer licence, the penalty is a maximum of two years in prison or 500 penalty units . ^{^[62]} If you produce tobacco leaf without a producer licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty that would have been payable if tobacco leaf had been manufactured into excisable goods. ^{^[63]} If your production of tobacco seed, plant or leaf does not comply with the Excise Act and any conditions specified in your licence, the penalty is a maximum of two years in prison or 500 penalty units. ^{^[64]} If you produce tobacco seed or plant at premises that are not specified in your licence, the penalty is a maximum of two years in prison or up to 500 penalty units. ^{^[65]} If you produce tobacco leaf at premises that are not specified in your licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty that would have been payable if tobacco leaf had been manufactured into excisable goods ^{^[66]} Deal in If you deal in tobacco seed or plant without a dealer licence, the penalty is a maximum of two years in prison or 500 penalty units. ^{^[67]} If you deal in tobacco leaf without a dealer licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty that would have been payable if tobacco leaf had been manufactured into excisable goods. ^{^[68]} If your dealing in tobacco seed, plant or leaf does not comply with the Excise Act and any conditions specified in your licence, the penalty is a maximum of two years in prison or 500 penalty units. ^{^[69]} If you deal in tobacco seed, plant or leaf at premises that are not specified in your licence, the penalty is a maximum of two years in prison or 500 penalty units. ^{^[70]} Manufacture If you manufacture excisable tobacco products without a manufacturer licence, 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 tobacco products. ^{^[71]} If you manufacture excisable tobacco products contrary to the Excise Act or any conditions specified in your licence, the penalty is a maximum of two years in prison or 500 penalty units. ^{^[72]} If you manufacture excisable tobacco products at premises that are not specified in your licence, 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 tobacco products. ^{^[73]} Keep or store If you are a licensed producer and you keep or store tobacco seed, or plant at premises that are not specified in your licence, the penalty is a maximum of two years in prison or 500 penalty units. ^{^[74]} If you are a licensed producer and you keep or store tobacco leaf at premises that are not specified in your licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty that would have been payable if tobacco leaf had been manufactured into excisable goods. ^{^[75]} If you are a licensed dealer and you keep or store tobacco seed, or plant at premises that are not specified in your licence, the penalty is a maximum of two years in prison or 500 penalty units. ^{^[76]} If you are a licensed dealer and you keep or store tobacco leaf at premises that are not specified in your licence, the penalty is a maximum of two years in prison or the greater of 500 penalty units and 5 times the amount of duty that would have been payable if tobacco leaf had been manufactured into excisable goods. ^{^[77]} If you possess or have custody or control of excisable tobacco products without 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 tobacco products. ^{^[78]} If you possess or have custody or control of tobacco seed or plant without permission, the penalty is a maximum of two years in prison or 500 penalty units. If you possess or have custody or control of tobacco leaf without 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 tobacco products. [79] 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. [80] Records If you do not keep, retain and produce records in accordance with a direction under section 50 of the Excise Act, the penalty is a maximum of 30 penalty units. Directions If you do not comply with a direction in regard to what parts of the factory can be used for various matters, the penalty is a maximum of 10 penalty units. [81] Counterfeit bale labels If you make and/or use counterfeit bale labels, the penalty is a maximum of 500 penalty units. [82] Moisture content If you have in your factory any manufactured tobacco containing more than 30% of moisture, the maximum penalty is 10 penalty units. [83] Facilities etc. If you do not provide all reasonable facilities for enabling us to exercise our powers under the Excise Act, the penalty is a maximum of 10 penalty units. [84] If you do not provide sufficient lights, correct weights and scales, and all labour necessary for weighing material received into, and all excisable tobacco products manufactured in, your factory, and for taking stock of all material and excisable tobacco products contained in your factory, the maximum penalty is 10 penalty units. [85] If we mark or seal excisable tobacco products or fasten, lock or seal any plant in your factory and you alter, break or erase the mark, seal, fastening or lock, the maximum penalty is 50 penalty units. [86] Marks and seals If we mark or seal excisable tobacco products and you alter, break or erase the mark or seal, the maximum penalty is 50 penalty units. [87]

2.6 TERMS USED

Excisable tobacco 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 to the Excise Tariff. As these guidelines deal with tobacco products, we have used the term excisable tobacco products. Excisable tobacco products include:

tobacco
cigars
cigarettes, and
snuff.

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 [88] is the document that you use to advise us:

the volume of excisable tobacco products that you have delivered into the Australian domestic market during the period designated on your Periodic settlement permission, or
the volume of excisable tobacco products that you wish to deliver into the Australian domestic market following approval.

Penalty units A penalty unit is specified in section 4AA of the Crimes Act 1914 and at the time of writing is $110. Section 50, direction This is a written instruction issued under section 50 of the Excise Act to a licensed manufacturer, licensed producer, licensed dealer, or proprietor of licensed premises, to keep specified records, furnish specified returns, retain records for a specified period and produce those records on demand by us. Tobacco Tobacco means tobacco leaf subjected to any process other than curing the leaf as stripped from the plant. [89] This means that until tobacco leaf is subjected to processes after curing it is not excisable. The species of the Nicotiana genus that are generally used for smoking, chewing or snuff are considered to produce tobacco leaf. Those species are currently Nicotiana tabacum, Nicotiana rusticum and Nicotiana sylvestris. 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.

2.7 LEGISLATION (quick reference guide)

In this chapter we have referred to the following legislation: 2.7.1 Excise Act 1901 Section 4 - Definitions Section 6A - How this Act applies to partnerships Section 24 - Excisable goods and goods liable to duties of Customs may be used in manufacturing excisable goods Section 25 - Only licensed manufacturers to manufacture excisable goods Section 26 - Licensed manufacturers to manufacture in accordance with Act and licence Section 27 - Licensed manufacturers to manufacture only at licensed premises Section 28 - Only licensed producers to produce tobacco leaf etc. Section 29 - Licensed producers to produce in accordance with Act and licence Section 30 - Licensed producers to store tobacco leaf etc. at licensed premises Section 31 - Licensed producers to produce tobacco leaf etc. at licensed premises Section 33 - Only licensed dealers to deal in tobacco leaf etc. Section 34 - Licensed dealers to deal in accordance with Act and licence Section 35 - Licensed dealers to store tobacco leaf etc. at licensed premises Section 36 - Licensed dealers to deal in tobacco leaf etc. at licensed premises Section 39 - Applications for licences Section 39D - Conditions of licence Section 39E - Duration of licences Section 39O - Death of licence holder Section 44 - Permission to move tobacco seed, tobacco plant and tobacco leaf Section 46 - Supervision by officers Section 49 - Facilities to officers Section 50 - Record keeping Section 51 - Collector may give directions Section 52 - Weights and scales Section 53 - Responsibility of manufacturers Section 54 - Liability to pay duty Section 58 - Entry for home consumption etc. Section 60 - Persons to keep excisable goods safely etc. Section 61A - Permission to remove goods that are subject to CEO's control Section 61C - Permission to deliver certain goods for home consumption without entry Section 62 - Deficiency in duty Section 68 - Exemption Section 75 - Destruction of waste tobacco Section 76 - Limitation of amount of moisture in tobacco Section 77 - How moisture determined Section 77AA - Tobacco leaf stock may be checked Section 86 - Officers to have access to factories and approved places Section 87 - Power to stop conveyances about to leave an excise place Section 87AA - Searches of conveyances without warrant Section 91 - Examine all goods Section 92 - Seals etc. not to be broken Section 106 - Samples Section 117 - Unlawful possession of excisable goods Section 117I - Counterfeit tobacco labels Section 120 - Offences Section 159 - Protection of confidentiality of information 2.7.2 Excise Regulations 1925 33 - Approval for uses and destruction of tobacco leaf 2.7.3 Excise Tariff Act 1921 The Schedule 2.7.4 Customs Act 1901 Section 105B - Extinguishment of duty on excise-equivalent goods 2.7.5 Customs (Prohibited Imports) Regulations 1956 4D - Importation of unmanufactured tobacco leaf 2.7.6 Crimes Act 1914 4AA - Penalty units 6 - Accessory after the fact 2.7.7 Criminal Code Act 1995 11.1 - Attempt 11.2 - Complicity and common purpose 11.5 - Conspiracy

OUR COMMITMENT TO YOU The information in this publication is current at August 2008. This publication is an expression of the Commissioner's opinion on the operation of tobacco excise legislation. This publication is not legally or administratively binding on the Commissioner and is not a 'public ruling' for the purposes of Section 105-60 or Division 358 of Schedule 1 to the Taxation Administration Act 1953 . The law does not provide for legally binding rulings on tobacco excise legislation. If you feel this publication does not fully cover your circumstances, please seek help from the Tax Office or a professional adviser. Since we regularly revise our publications to take account of any changes to the law, you should make sure this edition is the latest. The easiest way to do this is by checking for a more recent version on our website at www.ato.gov.au

Excise guidelines for the tobacco industry

	Date:	Version:
You are here	1 July 2006	Original document
	1 September 2014	Updated document
	1 April 2015	Updated document
	17 December 2021	Current document

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