Commonwealth Numbered Regulations - Explanatory Statements

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Issued by authority of the Minister for Revenue
and Assistant Treasurer

Excise Act 1901

Excise Amendment Regulations 2004 (No. 2)

Section 164 of the Excise Act 1901 (the Act) provides that the Governor-General may make regulations not inconsistent with the Act, prescribing all matters which by the Act are required or permitted to be prescribed, or as may be necessary or convenient to be prescribed for giving effect to the Act or for the conduct of any business relating to the Excise.

The Act provides that blending of petroleum products is 'manufacture', therefore requiring the blending to be carried out under an excise manufacturer's licence to ensure appropriate excise duty is identified and paid. Licensing is a fundamental control mechanism of the excise legislation for the protection of the revenue. However, the Act also enables exempt blends (blends that do not fall within the concept of 'manufacture' for the purposes of the excise legislation) to be prescribed. The intention of exemptions is to exclude from the licensing requirements certain limited circumstances that are non-commercial arrangements or do not represent a significant revenue risk, such as blending of additives with fuel in vehicle tanks by consumers.

Blends of ethanol and duty-paid petroleum products are exempt blends under the Excise Regulations 1925 (the Principal Regulations).

The purpose of the Regulations is to amend the Principal Regulations to remove the exemption on a blend of ethanol and petroleum product on which duty has been paid.

The removal of the exemption on blends of ethanol and petroleum products is a consequence of the passage of the Excise Tariff Amendment (Fuels) Bill 2004 (now Excise Tariff Amendment (Fuels) Act (No. 1) 2004, assented to on 22 June 2004) that validated Excise Tariff Proposal No. 4 (2002) imposing excise duty on fuel ethanol and providing a particular formula for calculating excise duty payable on blends involving ethanol and petroleum products. Accordingly, commercial blending of ethanol and petroleum products would be required to be licensed under the excise legislation, as in the case for all other commercial fuel blending.

Excise liability and treatment of blending of ethanol and petroleum products are now governed by the specific formula and accordingly the provision in the Principal Regulation, prescribing blends of ethanol and petroleum products as exempt blends, is no longer applicable.

The Regulations commenced on gazettal.

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