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4.0 Calculation Changes

There is a question on the proposed calculation in Section 7/8. The calculation in 7 includes both (a) the number of litres of obligation fuel removed for home consumption and (b) the number of litres of obligation fuel removed from a refinery other than for home consumption. It was written this way as there was concern that “removal for home consumption” only covered petrol and automotive diesel, goods that were explicitly mentioned in Schedule 3 of the Customs and Excise Act.

The actual definition of removal for home consumptions in the Act is as follows:

”For the purposes of this Part of this Act, goods are deemed to be removed for home consumption when the goods are physically removed from a Customs controlled area otherwise than when they are –

  1. Moved to another Customs controlled area pursuant to an approval given by the Chief Executive and for such purposes as may be approved by the Chief Executive; or
  2. Temporarily removed pursuant to an approval given by the Chief Executive and for such purposes as may be approved by the Chief Executive; or
  3. Removed for export or to an export warehouse”

Goods is not a defined term and our view the definition applies to any good removed for home consumption (i.e. all product streams) not just those listed in Schedule 3. It should be noted that all the refinery product streams are captured as goods in the Tariff Act.

Using this interpretation there is no need to capture (b) as that only captures refinery exports that are then subtracted in (e). Factor (b) could be removed but factor (e) may still be required to capture any product returned to the refinery for reprocessing/reblending (or in extreme cases exported).

It should also be noted that if this interpretation is not correct (if we interpret removal for home consumption to only cover petrol and diesel) then the proposed calculation is not correct. It would not capture imported jet fuel, aviation gasoline and fuel oil as none of these would be “removed for home consumption” when imported and would not be picked up in (b) when the refinery produced product is picked up.

Recommendation:

  • Get a legal view to ensure the definition of Removal for home consumption in the Customs and Excise Act covers all fuels. If it does modify the calculation in 7 to remove (b) and modify (e) – (e) should only cover any product returned to the refinery after passing through the excise point or exported after passing the excise point. If the opinion is the definition only covers petrol and diesel then modify the definition of (b) to ensure all imported products not captured in (a) are covered.

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