Commonwealth Numbered Regulations - Explanatory Statements

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Issued by the Authority of the Assistant Treasurer

Excise Act 1901

Excise Amendment Regulations 2000 (No. 5)

Section 164 of the Excise Act 1901 (the Act) provides that the Governor-General may make regulations prescribing matters required to give effect to the Act or the conduct of any business relating to the Excise.

Section 24 of the Act provides for goods liable to duties of Customs to be used in the manufacture of excisable goods, in prescribed cases and under prescribed conditions.

The Schedule to the Excise Tariff Act 1921 (the Tariff) sets out the items that duties of excise apply to and the rates of duty. The Tariff was amended by a Proposal tabled in the House of Representative on 21 June 2000 to include two new items to impose excise on premixed and designer drinks:

Item 1(D)       Other Excisable Beverages of an alcoholic strength by volume not exceeding 10% with a duty rate of $30.98 per litre of alcohol ; and

Item 2(H)       Other Excisable Beverages of an alcoholic strength by volume exceeding 10% with a duty rate of $52.46 per litre of alcohol.

The Regulations allow goods that fall under the category of other excisable beverages to be manufactured in Australia using imported alcohol, and therefore be subject to excise rather than customs duty on the end product.

There are some other excisable beverages on the market where alcohol (most commonly spirit, but potentially any type of alcohol), is imported and then blended in a Customs licensed warehouse with non-alcoholic beverages (ie soft drink such as Cola). The alcoholic strength of the spirit is reduced by mixing it with non-alcoholic beverages, (eg. from a 70% spirit to a 5% pre-mixed drink). This effectively changes the final duty rate applicable, but there is no mechanism to permit this under the existing Customs legislation. Thus without the Regulations, these goods would be subject to customs duty at the rate that would apply to the imported spirit from which they were made, at the time that spirit was entered into warehouse.

The Regulations in conjunction with appropriate administrative arrangements would facilitate the transfer of control of the process of manufacturing pre-mixed drinks from Customs to Excise without the need for payment of the excise component of the customs duty. Duty at the appropriate rate would then be paid as excise, after manufacture of the pre-mixed drink.

The Regulations apply retrospectively from 1 July 2000. If the Regulations did not apply retrospectively, other excisable beverages manufactured from imported spirit would be subject customs duty at the rate applying to full strength spirit. This would be inequitable with similar products manufactured using only local alcohol. As a consequence, the retrospective commencement of the Regulations is beneficial and will not contravene s.48 of the Acts Interpretation Act 1901.

Details of the amendments are in the Attachment.


Excise Amendment Regulations 2000 (No. 5)

Regulation 1 sets out the name of the Regulations.

Regulation 2 specifies that the Regulations are taken to have commenced on 1 July 2000.

Proposed Regulation 3 provides for the Excise Regulations 1925 to be amended as set out in Schedule 1.

Schedule 1 Amendments

Item 1 effectively repeals the definition for beverages containing distilled alcohol. This term became redundant following the introduction of excise for other excisable beverages by Tariff Proposal tabled in Parliament on 21 June 2000.

Item 2 repeals Part VI, Division 1A of the Regulations. This Division specified that brandy could be entered in bulk containers of 25 litres. With the commencement of the Excise Amendment (Alcoholic Beverages) Act 2000 on 1 July 2000, the Chief Executive Officer now has the authority to permit spirits and other excisable beverages to be entered into home consumption in bulk containers having a capacity of more than 20 litres. Division 1 A is therefore no longer required.

Items 3 and 4 amend Item 10 of Schedule 2. Column 2 of Item 10 currently prescribes that spirits that are liable to duties of Customs can be used in the manufacture of other excisable beverages. Condition (3) in Column 3 of Item 10 currently prescribes the condition that the resulting beverage must contain a greater proportion by volume of alcohol manufactured in Australia than of other alcohol.

The amendment made by Item 3 will allow the manufacture of other excisable beverages using any imported excise equivalent alcohol, rather than just spirit.

Item 4 removes the condition which requires a greater portion of Australian made alcohol than imported alcohol, which is restrictive in its application. The removal of this requirement will not disadvantage any local alcohol manufacturers.

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