Excise guidelines for the tobacco industry

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05 - MOVEMENT PERMISSIONS

5.1 PURPOSE

This chapter deals with:

• why you need a movement permission
• different movement permission types
• whether you can get a movement permission
• what is included in a movement permission
• whether the receiving premises have to be licensed
• whether you will need to pay a security
• what happens when your movement permission is granted
• your responsibilities
• what happens if your application for a movement permission is not approved
• when and how a movement permission can be revoked or cancelled
• how to apply for a movement permission
• how to amend a continuing movement permission, and
• penalties that can apply to offences in relation to movement permissions.

5.2 INTRODUCTION

Under the excise system, control of goods from the time of creation to the point of authorised delivery of the goods into the Australian domestic market, or export, lies with the Commissioner. To maintain this control, the Excise Act 1901 (Excise Act) requires that excisable goods are not to be moved without permission.

We refer to this form of permission as a movement permission. It is a permission we provide in writing that authorises you to move specified goods from one specified place to another or between a number of specified places that are licensed to one or more entities. [157] This permission may be subject to conditions.

The permission holder retains responsibility for any liability arising on the tobacco leaf and excisable tobacco products until they are taken up into the stock of the receiving premises.

The legislation differentiates between tobacco seed, plant and leaf, all of which are not excisable goods, and manufactured tobacco products, which are excisable goods. Even though the legislation differentiates between the two the effect is essentially the same. You need permission to move these goods from one place to another place. [158]

In this chapter, 'goods' refers both to tobacco seed, plant and/or leaf and to excisable tobacco products.

5.3 POLICY AND PRACTICE

5.3.1 WHAT DIFFERENT PERMISSION TYPES ARE THERE?

Depending on your circumstances, you may apply for a permission to move specified goods once (single permission) or goods of a particular kind on a continuing basis (continuing permission). Continuing permissions are used where you have a need to move goods in a regular pattern (for example, a delivery each week to the same premises). Continuing permissions can be issued at the establishment level where each licensed premises is specified or in some instances they can be issued at the client level. Client level continuing permissions allow for the movement of goods between all sites licensed to one or more entity specified in the permission.

A single permission is used when movements are not to a continuing or regular pattern to the same premises or in some instances when we have new entrants into the excise system.

There are six types of movement permission:

• Single movement permission (non-export) - a permission to move specified goods from one specified place to another specified place (effective for one movement)
• Continuing movement permission (non-export) establishment level - a permission to move goods of a kind specified from one or more specified place/s to another specified place or places on a continuing basis
• Continuing movement permission (non-export) client level - a permission to move goods of a kind specified from any specified place licensed to one or more entities to any other specified place licensed to that or any other entity on a continuing basis, or
• Single movement permission (export) - a permission to move specified goods from one specified place to a place of export (effective for one movement)
• Continuing movement permission (export) establishment level - a permission to move goods of a kind specified from one or more specified place/s to a place or places of export on a continuing basis
• Continuing movement permission (export) client level - a permission to move goods of a kind specified from any specified place licensed to one or more entities to a place for export on a continuing basis.

An export movement permission is not an authority to export, it only permits you to move the goods to a place for export. You must obtain authority to export separately from Customs and Border Protection Services.

5.3.2 CAN I GET A MOVEMENT PERMISSION?

You can be granted a movement permission if you are the owner of the:

• licensed place from where the goods are despatched
• licensed place where the goods are received, or goods to be moved, even if you do not hold a current excise licence for the despatching or receiving premises.

5.3.3 WHAT IS INCLUDED IN A MOVEMENT PERMISSION?

Each movement permission we approve contains three parts:

1. The permission

This specifies

• the permission holder

2. The conditions

Movement permissions can be subject to conditions that are necessary to protect the revenue or ensure compliance with the Excise Act. In general, the conditions listed below are considered necessary to do that. [159]

As a standard condition, you must provide to both the despatching and receiving premises a consecutively numbered document with each movement of goods that specifies:

• the despatching premises and destination
• the date of despatch
• the number and type of packages
• a description of the goods
• a statement that the goods are underbond , and
• any other information necessary to permit the goods to be dealt with at the destination.

This document should be communicated to the receiving premises within 24 hours of the goods being despatched.

A condition can also be included that limits the volume of goods and type of goods that can be moved within a specific period of time, or at any one time, although this detail can also be included in the schedule.

A condition that is imposed by the law on movement permissions for tobacco leaf requires each tobacco bale to have a tobacco bale label attached. The tobacco bale label must remain attached to the bale while the bale is not on premises specified in a manufacturer, producer or dealer licence. Tobacco bale labels are available from us and serve to uniquely identify each tobacco bale [160] .

The requirement for a tobacco bale label can be waived but we need to give you specific written permission. This would be considered where you can demonstrate reasons why the tobacco leaf cannot be put into bales.

The schedule

This specifies:

• the premises from which the goods can be removed
• the premises or port (air or ship) to which the goods can be moved
• in most cases the goods by tariff item that can be moved under the permission
• the quantity of goods that can be moved and
• for single movement permissions, the period or dates within which the goods may be moved.

Under a client level movement permission, the schedule may not specify all these details but only that any movement of goods between premises licensed to you or another specified entity, is approved.

The type of goods may be expressed generally (for example 'excisable goods', or 'excisable tobacco products') or specifically, by tariff item number or description.

A single movement permission will specify the kind and quantity of the goods that can be moved, for example 20 (outer cartons) x 20 (inner packs) x 250 cigarettes = 100,000 sticks classified to excise tariff sub-item 5.1.

5.3.4 DOES THE RECEIVING PREMISES HAVE TO BE LICENSED?

Generally, the receiving premises should be licensed. However, we may authorise underbond movement of goods to an unlicensed 'specified place', for example a waste destruction facility. [161]

5.3.5 WILL I NEED TO PAY A SECURITY?

Prior to granting a movement permission, we may also require you to provide a security to protect the revenue or ensure compliance with the Excise Act. Even if we don't require a security prior to the granting of the movement permission, we may ask for a security at a later time. We can also ask you to increase the value of any security you may already have given. [162]

A security can be a bond, guarantee, cash deposit or similar financial product for an amount of money which may be forfeited if there is a failure to comply with the Excise Act or any condition included in the movement permission. It is not necessary for a liability to arise as a result of the failure to comply, for the security to be forfeit. There is no statutory limit to the amount of a security but the amount is generally set by reference to the level of revenue at risk.

As part of assessing your application for a movement permission, we will decide whether you must provide a security. We may take into account:

• whether you currently hold an excise licence
• whether the despatching and receiving premises are licensed
• the type of goods involved
• the amount of the liability on the goods
• the tax compliance record of
  • the applicant for the permission
  • the despatching premises
  • the receiving premises, and
• the susceptibility of the goods to be lost or diverted into home consumption (i.e. the domestic market) without the payment of duty.

We cannot apply these securities against other tax debts.

We review securities linked to continuous movement permissions every three years, at which time they may be extended, revised or cancelled. Compliance with a single movement permission is assessed on completion of the movement of the excisable goods covered by the permission.

The decision to require a security is not reviewable under the objection process.

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

5.3.6 WHAT HAPPENS WHEN MY MOVEMENT PERMISSION IS GRANTED?

When your movement permission is granted, it will be sent to you. You can then move your goods in accordance with the schedule. You will need to keep appropriate records to track the movement of your goods.

5.3.7 WHAT ARE MY RESPONSIBILITIES?

Where you have had possession, custody or control of goods we may request you (the permission holder) to account for the goods. If you are able to demonstrate that the goods have been lawfully moved under a movement permission, this will be considered a satisfactory accounting. It is important that you keep good records of any movements of goods from and to your premises or under a movement permission issued to you.

If you cannot satisfactorily account for the goods, you will generally have an opportunity to pay the required excise duty, or if you refuse we may demand an amount equal to the duty that would have been payable on the goods had they been entered for home consumption on the day of the demand. [163]

The permission holder is accountable for the goods:

• from the time they are removed from the despatching premises, and
• until they are delivered to the receiving premises or the place for export.

The requirement to keep the goods safely and to satisfactorily account for them when requested transfers to the receiving premises if the conditions of the movement permission are met and the goods are taken up into the records of the receiver If there is a discrepancy between the quantity shown in the delivery documentation and the physical quantity received you should contact us.

In the exceptional case where the goods are moved to unlicensed premises, accountability for the goods remains with you, as the permission holder.

5.3.8 WHAT HAPPENS IF MY APPLICATION IS NOT APPROVED?

If we do not approve your application for a movement permission, or to amend your existing movement permission, we will notify you in writing. You will not be permitted to move the goods from the place nominated in the application without the required duty being paid.

Although a decision to refuse a permission application is not a reviewable decision under the Excise Act, if you are not satisfied you can ask us to conduct an internal review.

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

5.3.9 WHEN AND HOW CAN A MOVEMENT PERMISSION BE REVOKED OR CANCELLED?

A continuing permission remains in effect until it is cancelled. [164]

We can cancel your movement permission if:

• you ask us to do so
• we consider that there is a risk to the revenue,
• you are not complying with the requirements (including the conditions) of the permission or
• we have cancelled the licence of the receiving or despatching premises.

If we decide to cancel your movement permission, we will notify you in writing. The cancellation will take effect from the time:

• you are served with the cancellation notice, or
• specified on the cancellation notice.

Although a decision to revoke or cancel a permission is not a reviewable decision under the Excise Act, if you are not satisfied you can ask us to conduct an internal review.

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

5.4 PROCEDURES

5.4.1 HOW DO I APPLY FOR A MOVEMENT PERMISSION?

To apply for a movement permission, you should complete the relevant form available on our website.

If you do not have control of the proposed receiving premises (licensed or unlicensed), we require you to obtain a letter from the operator of these premises stating that they will accept responsibility for the underbond goods when received. The application forms contain details of the statement required from the operator of the receiving premises.

If you need to deliver goods to new premises within specified periods please ensure that you allow sufficient time for your application to be determined. Generally, we will make a decision on your application within 28 days unless we need further information.

5.4.2 HOW DO I AMEND MY CONTINUING MOVEMENT PERMISSION?

If you wish to amend your existing continuing movement permission (for example, change the schedule of receiving premises), you must send us either:

• a new application form with the amending details, or
• a letter including the permission number and details of the necessary changes.

If you wish to add new receiving premises to your existing permission, you must also provide us with a letter from the operator of the receiving premises accepting responsibility for the underbond goods when received. The application form contains details of the statement required from an operator of the receiving premises.

We will consider your request and send you a new or amended permission if approved. In the meantime you cannot move goods outside your current permission.

5.4.3 WHAT DO I DO IF I NEED MORE INFORMATION?

If you need more information on movement permissions contact us as follows:

• phone 1300 137 290
• fax 1300 130 916
• e-mail us at ATO-EXC-Tobacco@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.

5.5 WHAT PENALTIES CAN APPLY TO OFFENCES IN RELATION TO MOVEMENT PERMISSIONS?

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

Move

If you intentionally move tobacco seed or plant without a movement permission, the penalty is a maximum of two years in prison or up to 500 penalty units . [165]

If you intentionally move tobacco leaf without a movement 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 that would have been payable if tobacco leaf had been manufactured into excisable goods. [166]

If you intentionally move excisable tobacco products without a movement 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. ^[167]

If you intentionally move tobacco seed or plant contrary to your movement permission, the penalty is a maximum of two years in prison or 500 penalty units. [168]

If you intentionally move tobacco leaf contrary to your movement 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 that would have been payable if tobacco leaf had been manufactured into excisable goods. [169]

If you intentionally move excisable tobacco products contrary to your movement 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. [170]

A strict liability penalty of 100 units can apply to all offences included in this section. [171]

5.6 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.

Penalty units

A penalty unit is specified in section 4AA of the Crimes Act 1914 and, at the time of publication, is $170.

Tobacco

Tobacco means tobacco leaf subjected to any process other than curing the leaf as stripped from the plant. [172]

This means that tobacco leaf is not excisable unless subjected to processes after curing.

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

5.7 LEGISLATION (quick reference guide)

In this chapter we have referred to the following legislation:

5.7.1 Excise Act 1901

Section 16 - Right to require security

Section 17 - Form of security

Section 18 - General security may be given

Section 19 - Cancellation of bonds

Section 20 - New sureties

Section 21 - Form of security

Section 22 - Effect of security

Section 44 - Permission to move tobacco seed, tobacco plant and tobacco leaf

Section 60 - Persons to keep excisable goods safely

Section 61A - Permission to remove goods that are subject to the CEO's control

Section 75 - Destruction of waste tobacco

Section 77AA - Tobacco leaf stock may be checked

Section 117A - Unlawfully moving excisable goods

Section 117D - Unlawfully moving tobacco leaf

5.7.2 Excise Tariff Act 1921

The Schedule

5.7.3 Crimes Act 1914

4AA - Penalty units

5.7.4 Acts Interpretation Act 1901

Section 33 - Exercise of powers and duties