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EXCISE AMENDMENT REGULATIONS 2003 (NO. 2) 2003 NO. 203EXPLANATORY STATEMENT
STATUTORY RULES 2003 No. 203
Issued by authority of the Treasurer
Excise Act 1901
Excise Amendment Regulations 2003 (No. 2)
Section 164 of the Excise Act 1901 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
The purpose of these regulations is to amend references in the Excise Regulations 1925 as a consequence of changes to descriptions and rates of certain tariff items in Excise Tariff Proposal No. 1 (2003).
The Excise Tariff Proposal mechanism is provided for under section 114 of the Act for effecting alterations to the Excise Tariff. It is used most commonly for changing rates and restructuring items in the Schedule to the Excise Tariff Act 1921. The measure must be validated by an amendment to the Excise Tariff Act 1921 within 12 months from the date of tabling of the Proposal in the Parliament.
Excise Tariff Proposal No. 1 (2003) alters the Excise Tariff Act 1921 by introducing from 1 July 2003 an excise duty differential for high sulphur diesel and ultra low sulphur diesel (ULSD) and similar products - kerosene, heating oil, stabilised crude petroleum oil and topped crude petroleum oil for use as fuel in an internal combustion engine and certain other uses - based on sulphur content.
The differential treatment for high sulphur diesel (exceeding 50 parts per million) and ULSD (not exceeding 50 parts per million) was an initiative under the Measures for a Better Environment package announced by the Prime Minister on 31 May 1999. The Government made a commitment to apply an excise differential of 1 cent per litre from 1 January 2003 and a further 1 cent per litre from 1 January 2004. The measure was intended to encourage the early introduction of ULSD, which will be mandated from 1 January 2006. The Government deferred the introduction of the differential until 1 July 2003 because of concern about the possibility of raising costs to diesel users when the farm sector was facing serious drought conditions.
Excise Tariff Proposal No. 1 (2003) alters the item descriptions and references for diesel and similar products. The Regulations amend related references in the Principal Regulations to maintain the arrangements before 1 July 2003 relating to remissions, rebates or refunds for certain uses, generally other than as fuel in an internal combustion engine.
The Regulations also amend references in Principal Regulation 176 to exempt from licensing requirements, that are intended to ensure that appropriate excise duty is paid, any further blending of diesel and similar petroleum products where duty has been fully paid on each of the components at the rate applicable to high sulphur diesel or ULSD, as appropriate. Accordingly, the Regulations maintain the exemptions for blended petroleum products applying before 1 July 2003 and include the new tariff item references for products with high and ultra low sulphur content.
Details of the Regulations are set out in the Attachment.
The Act specifies no conditions required to be met: before the power to make these Regulations was exercised.
The Regulations commence retrospectively from 1 July 2003 to ensure continuity of remissions/rebates of duty arrangements.
Subsection 48(2) of the Acts Interpretation Act 1901 provides that a regulation or a provision of a regulation has no effect if it would take effect before the date of notification of the regulation in the Gazette and as a result the rights of a person would be affected so as to disadvantage that person or liabilities would be imposed on a person in respect of anything done or omitted to be done before the date of notification. This provision does not apply to the Regulations as they have the effect of maintaining the benefit of remissions and rebates of excise duties.
Excise Amendment Regulations 2003 (No. 2)
Regulation 1- Name of Regulations
Regulation 1 provides that the regulations are the Excise Amendment Regulations 2003 (No. 2).
Regulation 2 - Commencement
Regulation 2 provides that the regulations commence on 1 July 2003.
Regulation 3 - Amendment of Excise Regulations 1925
Regulation 3 provides that Schedule 1 amends the Excise Regulations 1925 (the Principal Regulations).
Schedule 1 - Amendments
Item 1- Subparagraph 50(1)(y)(11)
Paragraph 50(1)(y) relates to fuel for use other than in an internal combustion engine. Item 1 amends this paragraph by replacing references to diesel tariff items with the new item descriptions for high sulphur diesel and ultra low sulphur diesel (ULSD).
Items 2 and 3 - Subparagraphs 50(1)(zi)(i) and 50(1)(zi)(i)
These subparagraphs relate to fuel for use in gas turbine engines to generate electricity. Items 2 and 3 amend them by replacing deleted tariff item references for kerosene, certain stabilised crude petroleum oil and topped crude petroleum oil, for use as fuel in an internal combustion engine, with a general description of the items intended to be covered by the provisions. The subparagraphs enable remissions to be paid where duty is payable (subparagraph 50(1)(zi)(i)) or has been paid (subparagraph 50(1)(zj)(i)) on products classified to items both before and after 1 July 2003.
Item 4 - Subregulation 52G(1) definition of primary rate
This subregulation relates to the amount of remission, rebate or refund of excise duty on a petroleum product for the purposes of subparagraph 50(1)(y). Item 4 replaces the deleted tariff item reference to diesel with a reference to the rate applicable to diesel having a sulphur content not exceeding 50 parts per million (ULSD) and not being recycled diesel (which has a free rate). This amendment effectively maintains the rate of remission applicable before 1 July 2003.
Item 5 - Subregulation 52GA(1) definition of Primary rate
This subregulation relates to the amount of remission, rebate or refund of excise duty for certain petroleum products used in gas turbines referred to in subparagraphs 50(1)(zi) and (zj). Item 5 replaces the deleted tariff item reference with a reference to the rate applicable to diesel having a sulphur content not exceeding 50 parts per million. This amendment effectively maintains the rate of remission applicable before 1 July 2003.
Item 6 - Regulation 52J, definition of rate
This regulation relates to the amount of remission of excise duty on diesel fuel manufactured from waste oil. Item 5 replaces the deleted tariff item reference to diesel with a reference to the applicable diesel rate. This enables a rebate of 20% to be paid on the excise duty for high sulphur diesel or ULSD.
Item 7 - Paragraph 176(2)(i)
Item 7 amends the exempt blended petroleum products provision relating to engine performance and maintenance additives blended with duty paid petroleum products to include products where duty has been paid at the appropriate rate for high sulphur diesel or ULSD.
Item 8 - Paragraphs 176(2)(o) and (t)
Item 8 amends the exempt blended petroleum products provision in paragraph (o) relating to blends of diesel fuel and certain stabilised crude oil, to include diesel where duty has been paid at the appropriate rate for high sulphur diesel or ULSD.
Item 8 also amends paragraph (t), which exempts blends of petroleum products on which duty has been paid on all constituents of the blend at the rate applicable to diesel, to exempt constituents on which duty has been paid at the appropriate rate applicable to diesel after 1 July 2003 (not being recycled diesel at the ´free' rate) on the basis of sulphur content.
Item 9 - Paragraph 176(2)(v)
Item 9 amends the exempt blended petroleum products provision relating to diesel fuel for use in diesel engines meeting certain conditions in generating electricity to include diesel where duty has been paid at the appropriate rate for high sulphur diesel or ULSD.