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Are there any 'previously paid duties' for the purposes of section 6G of the Excise Tariff Act 1921 , in relation to a constituent element of a blend when the constituent element is a recycled product which has been manufactured by a recycling process applied to used and contaminated duty paid fuel, and no duty has been paid on the recycled product?

No. There are no 'previously paid duties' for the purposes of section 6G of the Excise Tariff Act. In this case, any duty that was paid on the fuel before it was recycled is not relevant for the purposes of section 6G.

An entity acquires duty paid fuel classified to subitem 10.28 of the Schedule to the Excise Tariff Act for use as a solvent. The solvent is used for the cleaning of engine parts.

As a result of its use as a solvent, the fuel is contaminated with dirt and particulates. The used solvent is collected and stored in a small tank.

The entity subjects the contaminated solvent to a recycling process to remove all dirt and particulates. The recycling process requires the contaminated solvent to pass through a filtration system in a continuous cycle.

The resultant product (that is, the recycled product) is not for use as a solvent.

The recycled product is classified to subitem 10.28.

The entity is a licensed manufacturer for the purposes of the Excise Act 1901 .

Duty is not paid on the recycled product.

The recycled product is then blended with diesel fuel on which duty has not been paid to produce a fuel which is suitable for use in diesel powered vehicles and which is classified to subitem 10.30.

Section 6G of the Excise Tariff Act provides the method for working out the duty payable on certain fuel blends specified in item 10 of the Schedule to the Excise Tariff Act. The amount of duty is worked out using the formula: [Volume * $0.38143] - Previously paid duties 'Previously paid duties' is defined in subsection 6G(1) of the Excise Tariff Act and means the sum of duty, whether excise duty or the excise equivalent amount of any customs duty that has already being paid on constituent elements of the blend that are classified (or if imported would have been classified had they been manufactured in Australia) to item 10 or 15 of the Schedule to the Excise Tariff Act.

The outcome of section 6G of the Excise Tariff Act is that the entire volume of the blend is subjected to a rate of duty of $0.38143 per litre, however, subtracted from that figure is any duty that has been previously paid on any of the constituents of the blend. In this case the constituent elements of the blend are the diesel and the recycled product. What needs to be determined is whether any duty that was paid on the solvent when it was originally delivered is encompassed by 'previously paid duties'.

The Commissioner's view is that the solvent that was originally delivered is not the constituent element of the blend. The constituent element is the recycled product.

As the recycled product has not had any duty paid on it there is no 'previously paid duties' to take into account for the purposes of section 6G of the Excise Tariff Act.