Excise - Collections - General - Meaning of 'ship's stores'

What is the definition of the term 'ship's stores' for the purposes of an exemption from excise duty under section 160A of the Excise Act 1901 (EA)?

'Ships stores' for the purposes of section 160A of the EA are goods included in the stores of a ship (as defined in section 130C of the Customs Act 1901 (CA)) engaged in making an international voyage (as defined in section 130C of the CA), where the goods are for the use of the passengers or crew or for the service of the ship.

In these circumstances there is no liability for excise duty in relation to alcoholic beverages and tobacco products for use by passengers and crew, nor for diesel oil, which is stored for use in the ship during the overseas voyage.

The taxpayer lodged a claim with the ATO for a refund of excise paid for cigarettes, whisky, beer and diesel oil loaded onto a ship in an Australian port that was departing to an overseas destination.

The taxpayer submitted that the goods were exempt from duty under section 160A(1) of the EA.

Ship's stores and aircraft stores are not liable to excise duty except as provided by the regulations - subsection 160A(1) of the EA. There is nothing in the Excise Regulations 1925 to make ship's stores liable to excise duty.

The term 'ship's stores' is defined in subsection 160A(5) of the EA as follows: 'Ship's stores means stores for the use of the passengers or crew of an overseas ship, of for the service of an overseas ship.'

By subsection 4(1) of the EA it is provided that 'overseas ship' has the same meaning as 'ship' has in Part VII of the CA. The word ship is not positively defined for the purposes of Part VII of the CA that deals with ship's stores and aircraft's stores. However, section 130C of the CA, an interpretation section for the purposes of the Part, provides that: '"ship" does not include - (a) a ship that is not currently engaged in making international voyages; or (b) a ship that is currently engaged in making international voyages but is about to make a voyage other than an international voyage.'

The expression 'international voyage' is also defined by section 130C of the CA, so as to mean, in relation to a ship: '. . . . a voyage, whether direct or indirect, between a place in Australia and a place outside Australia.'

Section 130C of the CA also provides that the expression 'place outside Australia' does not include: '(a) a ship, or an area of waters, outside Australia (b) an installation outside Australia; or (c) a reef, or an uninhabited island, outside Australia.'

Although no judicial authority has been identified on the meaning of the term 'for the service of (a ship)', there is an obiter reference in Re BP Australia Ltd & Collector of Customs (WA) (1985) 4 AAR 138 at 147: ' . . . . these goods were intended, in the case of the cigarettes, whisky and beer, as stores for the crew of the ship or, in the case of the diesel oil, as stores for the service of the ship'.

In the circumstances of section 160A of the CA, the stores, which would otherwise be excisable goods 'for the use of passengers and crew', would usually be alcoholic beverages and tobacco products.

Similarly, the stores which would otherwise be excisable goods 'for the service of' a ship would usually be petroleum products such as diesel fuel or lubricants to be used for the service of the ship.