EXCISE AMENDMENT REGULATIONS 2002 (NO. 2) 2002 NO. 351

Commonwealth Numbered Regulations - Explanatory Statements

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EXCISE AMENDMENT REGULATIONS 2002 (NO. 2) 2002 NO. 351

EXPLANATORY STATEMENT

STATUTORY RULES 2002 No. 351

Issued by authority of the Minister for Revenue and Assistant Treasurer

Excise Act 1901

Excise Amendment Regulations 2002 (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.

Subsection 78(1) of the Act provides in part that refunds, rebates and remissions of duty may be made in respect of goods generally or in respect of a class of goods and are subject to such conditions and restrictions (if any) as are prescribed.

The purpose of the amending Regulations is to amend the Excise Regulations 1925 (the principal Regulations) to allow for the refund of excise duty paid on fuel oil that has been used in connection with producing steam for certain activities, at a place at which mining operations relating to bauxite or the Bayer beneficiation process for refining bauxite into alumina is undertaken, where natural gas is not available (new paragraph 50(1)(zze) refers).

The current rate of excise and customs duty applying to such fuel oil is $0.07557 per litre and an equivalent refund of duty under the Diesel Fuel Rebate Scheme (DFRS) applies.

In 1999 the Act and the Customs Act 1901 were amended to provide that the DFRS would finish on 30 June 2002. Subsection 4(1) of the Diesel and Alternative Fuels Grants Scheme Act 1999 provided that the Parliament acknowledged that the Commonwealth intended to replace the grants under that Act and the DFRS with an Energy Grants (Credits) Scheme (the EGCS) to start on 1 July 2002 or earlier. With the announcement of the Fuel Tax Inquiry, the sunset date for the DFRS was extended by legislative amendment to 30 June 2003.

The delay in implementation of the EGCS resulted in unintended consequences for certain businesses, involved in generating electricity to be used in mining operations relating to bauxite or alumina, that made decisions based on the original intention to have the EGCS in place by 30 June 2002.

To overcome this effect, item 2 inserts new paragraph 50(1)(zze) into the principal Regulations. New paragraph 50(1)(zze) allows duty to be refunded on fuel oil that is used in connection with producing steam, at a place where mining operations relating to bauxite or the Bayer beneficiation process for refining bauxite into alumina are undertaken, for:

• generating electricity to be used in mining operations relating to bauxite or alumina; or

• generating electricity for a mining town the existence of which is necessary to allow mining operations relating to bauxite or alumina to take place; or

• use in the Bayer beneficiation process for refining bauxite into alumina in the course of mining operations.

In order to obtain the refund the fuel oil:

• must be delivered for home consumption on or after 1 July 2003; and

• must have been used at a place that is not supplied by natural gas, at which natural gas is not readily available, at which the supply of natural gas has been temporarily interrupted by an event beyond the user's control, or at which the supply is insufficient.

Item 1 makes a technical amendment to subparagraph 50(1)(zzd)(ii)(B) of the principal Regulations as a result of the additional paragraph that is inserted by item 2.

Item 3 inserts subregulation 50(7) into the principal Regulations. New subregulation 50(7) provides that the terms 'mining operations' and 'mining town', which are used in new paragraph 50(1)(zze), have the same meanings as in section 164 of the Customs Act 1901, as in force immediately before the commencement of this subregulation.

Details of the amending regulations are set out in the Attachment.

The amending Regulations commence on gazettal.

Authority: Section 164 of the Excise Act 1901

ATTACHMENT

Excise Amendment Regulations 2002 (No. 2)

Regulation 1- Name of Regulations

Regulation 1 provides that the Regulations are the Excise Amendment Regulations 2002 (No. 2).

Regulation 2 - Commencement

Regulation 2 provides that the Regulations commence on gazettal.

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)(zzd)(ii)B)

Item 1 replaces "365." with "365;" in subparagraph 50(1)(zzd)(ii)(B) of the principal Regulations as a consequence of the amendments made by item 2.

Item 2 - After paragraph (zzd)

Item 2 inserts a new circumstance into subregulation 50(1) of the principal Regulations where excise duty is refunded in respect of fuel oil (new paragraph 50(1)(zze)).

New paragraph 50(1)(zze) allows duty to be refunded on fuel oil that has been used in connection with producing steam, at a place where mining operations relating to bauxite or the Bayer beneficiation process for refining bauxite into alumina are undertaken, for:

• generating electricity to be used in mining operations relating to bauxite or alumina; or

• generating electricity for a mining town the existence of which is necessary to allow mining operations relating to bauxite or alumina to take place; or

• use in the Bayer beneficiation process for refining bauxite into alumina in the course of mining operations.

In order to obtain the refund the fuel oil:

• must be delivered for home consumption on or after 1 July 2003; and

Item 3 - After subregulation 50(6)

Item 3 inserts new subregulation 50(7) into the principal Regulations. New subregulation 50(7) provides that the terms 'mining operations' and 'mining town,' for the purposes of new paragraph 50(1)(zze), have the same meanings as in section 164 of the Customs Act 1901, as in force immediately before the commencement of this subregulation.