FEDERAL COURT OF AUSTRALIA Sogo Duty Free Pty Ltd v Commissioner of Taxation [2010] FCA 976 Citation: Sogo Duty Free Pty Ltd v Commissioner of Taxation [2010] FCA 976 Appeal from: Sogo Duty Free Pty Ltd v Commissioner of Taxation [2010] AATA 111 Parties: SOGO DUTY FREE PTY LTD v COMMISSIONER OF TAXATION File number: VID 161 of 2010 Judge: GORDON J Date of judgment: 6 September 2010 Catchwords: TAXATION – excise duties – relationship between ss 60 and 61D of the Excise Act 1901 (Cth) TAXATION – income tax –whether the Administrative Appeals Tribunal erred in concluding that the question of whether invoices were shams was not relevant – whether the Tribunal failed to take into account a relevant consideration – whether the Applicant was denied procedural fairness Legislation: Customs Act 1901 (Cth) Excise Act 1901 (Cth) Income Tax Assessment Act 1997 (Cth) Taxation Administration Act 1953 (Cth) Cases cited: Bolton v Federal Commissioner of Taxation (1964) 9 AITR 385 Caltex Australia Petroleum Pty Ltd v Federal Commissioner of Taxation (2008) 173 FCR 359 Collector of Customs (NSW) v Southern Shipping Co Ltd (1962) 107 CLR 279 Sidebottom v Giuliano (2002) 123 FCR 594 Snook v London and West Riding Investments Limited [1967] 2 QB 786 Date of hearing: 23 August 2010 Date of last submissions: 23 August 2010 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 51 Counsel for the Applicant: MY Bearman with KJ Dernelley Solicitor for the Applicant: Felipe Tellez Counsel for the Respondent: P Sest Solicitor for the Respondent: Australian Government Solicitor IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 161 of 2010 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN: SOGO DUTY FREE PTY LTD Applicant AND: COMMISSIONER OF TAXATION Respondent JUDGE: GORDON J DATE OF ORDER: 6 SEPTEMBER 2010 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The Appeal be dismissed. 2. The Applicant pay the Respondent's costs of the Appeal. 3. The Respondent's Notice of Motion be dismissed with no order as to costs. Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 161 of 2010 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN: SOGO DUTY FREE PTY LTD Applicant AND: COMMISSIONER OF TAXATION Respondent JUDGE: GORDON J DATE: 6 SEPTEMBER 2010 PLACE: MELBOURNE REASONS FOR JUDGMENT INTRODUCTION 1 Sogo Duty Free Pty Ltd (the Applicant) appeals from a decision of the Administrative Appeal Tribunal (the Tribunal) of 12 February 2010 which affirmed three decisions of the respondent, the Commissioner of Taxation (the Commissioner): 1. that the Applicant had understated its income for the tax years ending 30 June 1999 to 30 June 2001 (the relevant tax years); 2. that the Applicant was liable to pay goods and service tax (GST) on sales which the Applicant claimed were GST exempt as exports; and 3. to demand payment of excise duty on the basis that the Applicant had breached the applicable conditions of its permission to sell goods duty free. Only the first and third decisions are relevant to these proceedings. 2 The Applicant was incorporated on 30 June 1998 with Mr Hoang Hai Chiem (Mr Chiem) as its sole director and secretary. The Applicant's business involved selling duty free products for purchase by people prior to travelling overseas. These products included cigarettes. The business was operated from premises at 248 Springvale Road, Springvale, Victoria. The income tax application 3 On or about 25 October 2001, the Applicant lodged its income tax returns for the relevant tax years. Assessments were issued to the Applicant on or about 31 October 2001. On or about 18 January 2002, the Applicant was notified of the Commissioner's intention to audit its affairs. 4 On or about 23 January 2002, the Applicant lodged an amended income tax return for the 2000 and 2001 income tax years. The Commissioner issued amended assessments concerning these years on 12 March 2002. On 18 September 2003, the Commissioner issued amended assessments to the Applicant in respect of the relevant tax years. 5 On or about 18 September 2003 (but after the issue of the amended assessments), the Commissioner further considered the Applicant's affairs and, in particular, invoices which purported to record sales of duty free cigarettes to crews of visiting ships. According to the Applicant's summary of facts adopted by the Tribunal in [54] of its reasons for decision, the Commissioner concluded that "these crew sales did not occur and that the crew sales invoices were shams" on the basis that the duty free goods were not sold for export as recorded by the invoices nor at the price shown on the invoices because the sales were made domestically. The reason for the Commissioner's conclusion was based on the Commissioner's view that: 1. some of the invoices recording the sales were made on days when the relevant ship was not in a port in Australia; 2. some of the invoices did not record the name of the relevant ship; and 3. some of the invoices recorded sales to crew members who were not listed as crew members of the relevant ship. 6 The Commissioner's conclusion and submission that "these crew sales did not occur and that the crew sales invoices were shams" lies at the heart of this appeal and will be discussed in greater detail below. 7 Also on or about 18 September 2003, the Commissioner further concluded that the purported crew sales of cigarettes were in fact sales made for domestic consumption to persons unknown, resulting in an understatement of income by the Applicant for the purposes of Div 6 of the Income Tax Assessment Act 1997 (Cth) (the 1997 Act). The amount of income understated was calculated by the Commissioner by applying "a recommended wholesale sales price to the quantities of cigarettes purported to have been crew sales in the relevant month". The recommended wholesale price was derived from the Australian Retail Tobacconist publication of recommended wholesale prices. 8 On 16 March 2005, the Commissioner issued amended assessments to the Applicant for the relevant tax years. The Applicant objected to the amended assessments on 11 April 2005. On 24 May 2005, the Commissioner disallowed the Applicant's objection for the 1999 and 2001 tax years and partially allowed the objection for the 2000 year. 9 A key issue before the Tribunal was whether, between 11 April 1999 and 24 May 2001 (the relevant period), the Applicant sold cigarettes duty free in circumstances where it knew or should have known that the goods were intended, or might reasonably have been intended, for domestic consumption. The Commissioner submitted to the Tribunal that the Applicant had failed to demonstrate that the price recorded on the relevant invoices for the cigarettes represented the actual price it received. During the relevant period, the Applicant sold 46,017,670 single cigarettes packaged in cartons. 10 Before the Tribunal, the Applicant submitted that its invoices "reflected bona fide sales of cigarettes": see [56] of the Tribunal's reasons for decision. The Applicant submitted it had sold the cigarettes to persons unknown in good faith for the purpose of export and the cigarettes were not sold on the domestic market. The Applicant submitted that it did not underestimate its income for these sales and challenged the methodology adopted by the Commissioner in calculating the purported understated income. The methodology was not challenged on appeal to this Court. 11 The Applicant further submitted to the Tribunal that, on the evidence before the Tribunal, the income it had derived from the gross sales had been included in its assessable income for the relevant tax years. 12 After acknowledging that the Applicant bears the onus of proof in challenging any assessment (s 14ZZK of the Taxation Administration Act 1953 (Cth)) and evaluating the evidence, the Tribunal rejected the Applicant's submissions. The Tribunal concluded that the evidence put forward by the Applicant was "less than convincing", unreliable and did not discharge the Applicant's onus of proof to establish that the amount of taxable income for which it had been assessed exceeded the actual income it derived during the relevant tax years. Importantly, the Tribunal also concluded at [115] of its reasons for decision: The Tribunal does not consider that anything turns on the question of whether or not the sales were shams as such. For reasons contended on behalf of the Applicant, it was probably incorrect for the [Commissioner] to describe the sales as shams but any such characterisation, as opposed to the substance of the transactions, is of no relevance. The excise liability application 13 The second application before the Tribunal relevant to this appeal concerned the disallowance of an objection against a demand made by the Commissioner under s 60 of the Excise Act 1901 (Cth) (the Excise Act). 14 The facts surrounding the excise application, which were not in dispute, can be summarised as follows. 15 The Applicant, a holder of a Warehouse Licence and a Permission granted under the Excise Act, was authorised to operate an outwards duty free shop within the meaning of s 61D of the Excise Act and s 96A(2) of the Customs Act 1901 (Cth). That Permission contained a number of conditions, including, inter alia: 1. that the Permission was for delivery of goods to the relevant traveller for export personally by the traveller when making the international flight or voyage and the exportation of those goods by the relevant traveller when making that international flight or voyage, without the goods having being entered for export; 2. a "Delivery Condition" which provided that the Applicant had to deliver the goods in a sealed package to the relevant traveller on board the ship not more than 24 hours before the departure time of the ship and obtain a signed acknowledgement stamped with the vessels name from a ship's officer for the goods received on board; and 3. a "Proof Condition" incorporated by reference to s 61D(10) of the Excise Act which provided that the Applicant had to provide the Commissioner with proof, in a prescribed way and within a prescribed time, of the export of goods delivered to a relevant traveller in accordance with the Permission. 16 On 30 September 2008, the Commissioner issued a demand under s 60 of the Excise Act for $11,732,276.94 (that amount was later reduced to $11,711,497.02). On 27 November 2008, the Applicant objected to the demand. On 23 March 2009, the Commissioner disallowed the Applicant's objection in full for the relevant period. 17 The Commissioner submitted to the Tribunal that the Applicant had breached the Delivery Condition and the Proof Condition of the Permission. The Commissioner submitted that that Delivery Condition had been breached because the Applicant had failed to produce proof that the goods purchased by or on behalf of the relevant travellers, and delivered to the relevant travellers or their representatives at the store, had in fact been exported by the relevant travellers. The Commissioner further submitted that the Applicant had permitted the goods to find their way into home consumption by some irregular means contrary to s 60 of the Excise Act, namely contrary to the Proof Condition. 18 As noted earlier (see [12] above), the Tribunal did not accept that the Applicant discharged its onus of proof. The Tribunal concluded the goods were not sold for export but were delivered into home consumption, thus rendering the Applicant liable to pay excise duty on each cigarette. The Tribunal further concluded that the Applicant's delivery of the goods into home consumption also meant that the Applicant failed to keep the goods safely within the meaning of s 60 of the Excise Act: see [118] of the Tribunal's reasons for decision. 19 At paragraph [119] of the Tribunal's reasons for decision, the Tribunal concluded: The object of section 60 is to ensure that excisable goods do not find their way into home consumption without the payment of duty: Sidebottom v Giuliano (2000) 98 FCR 579. The Applicant had an obligation to keep the goods safe from loss or destruction: Collector of Customs (NSW) v Southern Shipping Co Ltd (1962) 107 CLR 279. The Applicant failed to meet these fundamental obligations. The Applicant rarely, if at all, exhibited any concern as to whether goods leaving its shop had been entrusted to genuine representatives of ships' crews or whether the goods ultimately found their way onto a ship purportedly in port in Victoria at the time. The Applicant quite clearly contravened the Delivery Condition and failed to satisfy the Proof Condition which formed the basis upon which he had been entrusted the possession of the goods. Therefore the goods must be deemed to have been entered and delivered for home consumption, rendering the Applicant liable to pay excise duty on those goods. ISSUES ON APPEAL 20 By its Further Amended Notice of Appeal, the Applicant raised the following questions: 2.1 Whether the [Tribunal], in making a decision in writing affirming a decision under review for the purposes of s 43(1)(a) of the Administrative Appeals Tribunal Act 1975 ("the AAT Act") was authorised or empowered to make a decision within the meaning of that section that: (a) was so unreasonable that no reasonable decision maker could have made it; or (b) disregarded relevant considerations that the Tribunal was bound to consider and which materially affected the decision; or (c) took into account irrelevant consideration[s] that the Tribunal was bound to disregard and which materially affected the decision. … 2.4 Whether the Tribunal denied the [A]pplicant procedural fairness by deciding that the [A]pplicant had not discharged its onus of proof without first considering whether the sales were shams and without giving the [A]pplicant the opportunity to be heard on the question whether the Tribunal could or should do so. 2.5 Whether s 61D of the [Excise Act] should be read and construed as codifying the circumstances in which a proprietor of an outbound duty free shop holding a permission under s 61D(2) is to be assessed to excise duty in respect of goods held subject to that permission, to the exclusion of any operation of s 60 in respect of those goods. 2.6 Whether the respondent is authorised or empowered by s 60(1) of the Excise Act to make a demand in writing in accordance with that section in respect of goods delivered to a proprietor of [an] outbound duty free shop to which a permission is granted under s 61D(2). 2.7 Whether the application of s 61D(12) of the Excise Act deeming a person holding such a permission to have entered goods for home consumption constitutes or is capable of constituting a failure to keep goods safely within the meaning of s 60(1)(a). Grounds 2.2 and 2.3 were not pressed at the hearing. APPEAL GROUNDs 2.1 AND 2.4: INCOME TAX 21 Grounds 2.1 and 2.4 both concern the Applicant's income tax claim. The Applicant submitted that the Commissioner's assessments "were solely founded on the premise that the invoices were shams and, hence, their content identifying the amounts for which the [cigarettes] were sold was untrue". The Applicant submitted that the Tribunal denied the Applicant procedural fairness by deciding that the Applicant had not discharged its onus of proof without first considering whether the sales were shams and without giving the Applicant the opportunity to be heard on the question whether the Tribunal could or should do so. These grounds proceed from a fundamental misconception and are rejected. 22 The Applicant asserts that the Commissioner conducted his case before the Tribunal on the basis that the transactions recorded in the invoices were "shams", implying that the sales did not occur: see Snook v London and West Riding Investments Limited [1967] 2 QB 786 at 802 per Diplock LJ and Bolton v Federal Commissioner of Taxation (1964) 9 AITR 385. That is not correct. 23 Before the Tribunal, the Commissioner, in both his oral and written submissions, stated that the Commissioner did not characterise the sales as shams in the sense that the sales did not occur but did submit that the sales recorded in those invoices were not "crew sales": see, by way of example, paragraph [5] above. The Commissioner's written submissions before the Tribunal did use the phrase "sham transactions". However, when that statement is read in context, it is clear that the Commissioner was not and did not allege that the sales did not occur. Rather, the Commissioner's submission was that the some of the details on the invoices were false – such as the prices and the identity of the alleged purchaser (as a member of the ships' crews). Moreover, the Tribunal accurately recorded the parties' submissions in the following terms: [55] The [Commissioner] contended that the Applicant's invoices purporting to record crew sales were shams and the cigarettes purported to be sold to crew of visiting ships were in fact sold in the domestic market to persons unknown. Furthermore, the actual sales price on each invoice was grossly understated and accordingly the assessable income returned by the Applicant in accordance with section 6-5 of the [1997 Act] was understated. [56] The Applicant contended that its invoices reflected bona fide sales of cigarettes. It had sold the cigarettes to persons unknown in good faith and for the purpose of export, and that the cigarettes were not sold in the domestic market. … 24 The fact that the cigarettes were sold in the quantities stated in the invoices was not challenged. Sales in the quantities specified in the invoices occurred – the questions were to whom and at what price? In fact, as the Commissioner pointed out to the Court, the characterisation of the invoices as "shams" (implying that the sales did not occur) appears to have been first raised by the Applicant in its oral submissions at the Tribunal Hearing. 25 What then did the Tribunal do with the respective submissions? The Tribunal undertook a detailed assessment of the oral and written evidence provided to the Tribunal by the parties. The Tribunal concluded that Mr Chiem's evidence was integral to its decision, that his evidence was unreliable and that Mr Chiem was "less than convincing" in relation to a number of key aspects of the sales process. His evidence led the Tribunal to conclude that "the [sales] process was, at best, inefficient and unreliable and, at worst, suggestive of a cynical if not calculated disregard for the destination of the goods sold". For example, the Tribunal concluded that: 1. it was improbable that Mr Chiem could have dealt with a small group of individuals over a protracted period, engaging in transactions worth millions of dollars without ever knowing their names and without having any means of contacting them. The Tribunal noted that none were called to give evidence; 2. the process adopted for handling ships' manifests was an inconsistent and futile procedure which served no purpose in verifying delivery of goods to ships; 3. in relation to invoices for particular ships' crews, the quantities of goods purportedly ordered were on average for each crew member so great as to be implausible; and 4. in relation to other invoices for other ships' crews, the quantities of goods purportedly ordered for crew members were exactly the same quantities of exactly the same three brands of cigarettes. The Applicant did not submit that any of these findings was open to review. 26 For those and other reasons, the Tribunal concluded that the Applicant did not discharge its onus of proof. 27 As is apparent, the premise from which these Appeal Grounds proceed, namely that the hearing had been conducted on the basis that the transactions were "shams" in the sense the sales never occurred was wrong and the grounds of appeal fail. The fact that sales of cigarettes had occurred was not in dispute. The question for the Tribunal was whether it accepted the Applicant's submission that it had "sold the cigarettes to persons unknown in good faith and for the purpose of export, and that the cigarettes were not sold in the domestic market". The Tribunal rejected the Applicant's evidence and concluded that it had failed to discharge its onus of proof. 28 Contrary to the Applicant's submission before this Court, the Tribunal did not need to first consider whether the sales were shams. It was not the basis on which either party conducted their case before the Tribunal and was not the basis on which the Tribunal determined the application for review: see [12] above. 29 The Applicant's Appeal Grounds 2.1 and 2.4 proceed from a false premise. The Applicant was not denied an opportunity to be heard. It simply failed to discharge the onus it bore. 30 The next issue for the Tribunal was the methodology adopted by the Commissioner in determining the Applicant's assessable income. The Tribunal accepted the Commissioner's methodology as "the only logical means of determining the Applicant's income once one accepts the premise of the [Commissioner's] claim" (emphasis added): see [116] of the Tribunal's reasons for decision. The Applicant does not seek to challenge that finding. However, the Applicant submitted that the Tribunal "predicated its decision on the acceptance of a premise about which it expressly made no decision". On this basis, the Applicant submitted that the findings concerning the methodology could only arise if a finding was made that the sales were shams. For the reasons explained in [22] – [29] above, that contention also proceeds from the same false premise. The Tribunal expressly concluded that the question of whether the transactions were shams was not a matter on which anything turned: see [12] above. As the Commissioner submitted, the Tribunal considered the question of "sham" and determined, correctly, that it was not relevant. The Tribunal correctly concluded that the substance of the transactions was significant: see [12] above and [25] above. And it was the substance of the sales – namely who they were sold to and at what price – where the Applicant failed to discharge the onus that it bore. The methodology adopted by the Commissioner in determining the Applicant's assessable income was not predicated on a premise that the sales were shams but on the basis that the cigarettes were in fact sold in the domestic market at the wholesale sales price recommended by the Australian Retail Tobacconist and not to "crews" at the prices stated in the invoices. 31 The Applicant's Appeal Grounds 2.1 and 2.4 are dismissed. APPEAL GROUNDS 2.5 TO 2.7: S 60 OF THE EXCISE ACT LIABILITY 32 These Appeal Grounds also fail. 33 There is no dispute that the cigarettes the Applicant sold from its duty free store were "excisable goods" as defined in s 4 of the Excise Act. Section 54(1) of the Excise Act provides that an owner who "enters" excisable goods for home consumption shall pay to the Collector (here, the Commissioner) the excise duty on those goods. Section 59 of that Act provides that the excise duty on excisable goods must be paid at the rate in force either when the goods are delivered into home consumption (under s 61C(2)) or when payment is made, whichever is the earlier. 34 Section 60 relevantly provides: (1) Where a person … who has, or has been entrusted with, the possession, custody or control of excisable goods which are subject to the [Commissioner's] control: (a) fails to keep those goods safely; or (b) when so requested by a Collector, does not account for those goods to the satisfaction of a Collector; the person shall, on demand in writing made by a Collector, pay to the Commonwealth an amount equal to the amount of the Excise duty which would have been payable on those goods if they had been entered for home consumption on the day on which the Collector made the demand. … (4) This section does not affect the liability of a person arising or by virtue of: (a) any other provision of this Act; or (b) a security given under this Act. 35 Under s 61(1) of the Excise Act, all excisable goods are subject to the Commissioner's control until delivered from home consumption or for exportation to a place outside Australia, whichever occurs first. 36 Finally, s 61D of the Act relevantly provides: (1) In this section: … "relevant traveller" means a person: (a) who intends to make an international flight, whether as a passenger on, or as a pilot or member of the crew of, an aircraft; or (b) who intends to make an international voyage, whether as a passenger on, or as the master or a member of the crew of, a ship. … (2) Subject to the regulations (if any), a Collector may give permission, in accordance with subsection (3), for excisable goods that are specified in the permission, are subject to the [Commissioner's] control and are sold to a relevant traveller in an outwards duty free shop that is specified in the permission to be: (a) delivered to the relevant traveller personally for exportation by him or her when making the international flight or voyage in relation to which he or she is a relevant traveller; and (b) exported by the relevant traveller when making that flight or voyage without the goods having been entered for exportation; and, subject to subsection (13), the permission is authority for such goods to be so delivered and so exported. … (10) A permission under subsection (2) is subject to: (a) the condition that the proprietor of the outwards duty free shop to which the permission relates will ensure that relevant travellers to whom goods are delivered in accordance with the permission are aware of any conditions of the permission with which they are required to comply; and (b) the condition that that proprietor will provide a Collector with proof, in a prescribed way and within a prescribed time, of the export of goods delivered to a relevant traveller in accordance with the permission. … (12) Where the proprietor of an outwards duty free shop to which a permission under subsection (2) relates does not produce the proof required by paragraph (10)(b) that goods delivered by him or her to a relevant traveller in accordance with the permission have been exported by that traveller, the goods shall be deemed to have been entered, and delivered, for home consumption by the proprietor, as owner of the goods, on the day on which the goods were delivered to that traveller. … (Emphasis added). 37 In relation to Grounds 2.5 to 2.7, the Applicant submitted: [Section] s 61D [of the Excise Act] provides an exclusive code as to the circumstances in which a proprietor of an outwards bound duty free store may be assessed in respect of goods to which a permission has been granted under that section, in the sense that its operation is inconsistent with the operation of s 60 and, hence, excludes the operation of s 60. … 38 The Applicant submitted that s 61D precluded the operation of s 60, and because it did so, the Tribunal was not authorised or empowered to affirm the Commissioner's decision to disallow the Applicant's objection against the application of s 60. In support of this submission, the Applicant submitted: 1. The legal effect of an application of s 61D(12) is different to the legal effect of an application of s 60(1), as the former imposes excise duty on actual goods whereas the latter "creates a debt due to the Commonwealth equal to forgone duty"; 2. Section 61D is limited in its application to proprietors of duty free shops, holding relevant permissions under the section; 3. The requirements in s 61D are more strict than s 60; 4. Section 61D and s 60 operate at different points – s 61D from the day of delivery, s 60 from the date of demand; and 5. As s 60(2) expressly relates to permissions granted under s 61A, it is to be expected that s 60 would expressly refer to a permission under s 61D if it were intended to apply. 39 Alternatively, the Applicant submitted that if s 61D did not preclude the operation of s 60 then the Tribunal "conflated the requirements of the two sections" by finding on the one hand that the goods were delivered into home consumption (at [118] of the Tribunal's reasons for decision) and on the other finding that the goods were deemed to have been entered for home consumption (at [119] of the Tribunal's reasons for decision). The Applicant submitted that "the former statement was not a separate finding but a statement of conclusion, founded upon the latter". Finally, the Applicant submitted that regardless of whether s 61D was a code, the conditions in s 61D were "wholly independent" of any question as to whether the goods had been safely kept for the purposes of s 60. 40 I reject the Applicant's submissions. They are contrary to the express words of the Excise Act and the scheme of the Excise Act. 41 Section 61D is not an "exclusive code" for liability and payment of excise duty. Section s 61D regulates the intended exportation of goods and not their entry for or delivery into home consumption. For example, the permission under s 61D(2) is directed specifically to (1) excisable goods (2) subject to the Commissioner's control (that is, not yet delivered for home consumption or for export) and (3) which are sold to a relevant traveller in an outwards duty free shop that is specified in the permission thereby permitting the goods to be delivered to the relevant traveller personally for exportation by him and so exported without having being entered for exportation. That permission is subject to conditions (see s 61D(10)). One condition (s 61D(10)(b)) is that the proprietor (here, the Applicant) has to provide the collector with proof (in a prescribed way and within a prescribed time) of the export of goods delivered to a relevant traveller in accordance with the permission. 42 As noted above, s 61D(12) provides that: Where the proprietor of an outwards duty free ship to which permission under subsection (2) relates does not produce the proof required under paragraph (10)(b) that goods delivered by him or her to a relevant traveller in accordance with the permission have been exported by that traveller, the goods shall be deemed to have been entered, and delivered, for home consumption by the proprietor, as owner of the goods, on the day on which the goods were delivered to that traveller. (Emphasis added). 43 As the Commissioner submitted, s 61D(12) is a "regulatory and mechanical provision designed to ensure proper compliance by a proprietor with its responsibilities for the export of excisable goods". Once the goods are deemed to have been entered and delivered for home consumption by virtue of s 61D(12), two consequences flow: 1. s 61D has "no further role to play by itself in terms of imposing any excise or other liability". It does not impose any excise. Other provisions in the Excise Act are necessary for that to occur and, in particular, s 60 of the Excise Act. That is what occurred in the present appeal; and 2. the deemed delivery of goods into home consumption ex facie brings the Commissioner's control to an end, pursuant to s 61(1) of the Excise Act: Collector of Customs (NSW) v Southern Shipping Co Ltd (1962) 107 CLR 279 and Caltex Australia Petroleum Pty Ltd v Federal Commissioner of Taxation (2008) 173 FCR 359. 44 Those consequences do not, however, render s 60 inapplicable. A demand under s 60 is not an imposition of excise duty or a substitute for excise duty but rather a liability that is collateral to a liability for excise duty: Southern Shipping 107 CLR 279 at 288 per Dixon J. As Sundberg J said in Caltex 173 FCR 359 at [155]: … it is not correct to say that s 60 has no application in respect of goods over which the Commissioner's control has come to an end. The section applies where (1) a person has or has had possession of excisable goods, (2) the goods are subject to the Commissioner's control (i.e. have not been delivered) and (3) there is a failure to keep them safely or a failure to account for them. It seems to me that the requirement (2) for the goods to be subject to control is concerned with and referable to the period during which they are in the possession of the relevant person rather than the time at which the Commissioner relies on the section. The very thing the section is concerned with is the loss of goods (for example, their disappearance without adequate explanation) or the movement of goods into home consumption while subject to control and without the payment of duty. Section 60 it seems to me has no less an application to excisable goods that have ceased to be subject to control, where the cessation of that control is a result of the manufacturer delivering the goods into home consumption in an unauthorised manner. 45 The position here was no different – the effect of the Tribunal's findings was that the goods could not be accounted for by the Applicant and were deemed to have been delivered into home consumption without the payment of duty. That was "exactly a circumstance correlating to the failure to keep the goods safely to which s 60 is directed". 46 Further, the Applicant's submission that s 61D is an "exclusive code" for liability and payment of excise duty ignores s 60(4) which provides that s 60 does not affect the liability of a person under any other provision of the Excise Act. A similar contention of codification was rejected by Goldberg J in Sidebottom v Giuliano (2002) 123 FCR 594 at [14]: I do not accept the submission that what the applicants describe as the "two regimes" for the collection of duty are mutually exclusive. The submission flies in the face of subs(4) of s 60 which provides: "(4) This section does not affect the liability of a person arising under or by virtue of: (a) any other provision of this Act; or (b) a security given under this Act." This provision makes it clear that there can be a liability to pay an amount under s 60 at the same time that there is a liability arising under or by virtue of another provision of the Act. (emphasis added). Although that case involved different sections of the Excise Act, the "argumentative logic" put forward by the Applicant is identical. 47 The balance of the Applicant's submissions (see [38] above) are similarly flawed. In particular, the "strictness" of s 61D in comparison to s 60 (see [38(3)] above) and the different points of operation of those sections (see [38(4)] above) ignores the different legislative functions of the sections. Further, the Applicant's reference to s 60(2) of the Excise Act (see [38(5)] above) does not assist it. The Act in force at the time the demand was issued did not contain such s 60(2) (s 60(2) was in fact repealed by the Excise Laws Amendment (Fuel Tax Reform and Other Measures) Act 2006 (Cth)) and, in any event, s 60(2) before its repeal did not refer to s 61A. As identified by the Commissioner, the Applicant may have in fact been referring to s 60(1A) which relates to permissions given under s 61A. Regardless, it is incorrect to assert that s 60 would have to expressly refer to s 61D for the reasons outlined in [41] to [44] above. 48 Further, the Applicant's alternative submission that the Tribunal "conflated" the requirements of ss 60 and 61D is also incorrect. At paragraphs [118] and [119], the Tribunal made two separate findings. First, the Tribunal concluded (having rejected the Applicant's evidence) that the goods were not sold for export but were delivered into home consumption – that is sold domestically. As a result, the Tribunal concluded correctly that the Applicant was liable to pay excise duty on the goods, which it had not paid, and that the Applicant had failed to keep the goods safely for the purposes of s 60. Secondly, the Tribunal concluded that the Applicant had breached the Permission by failing to satisfy the Proof Condition and contravening the Delivery Condition. As a result, the Tribunal concluded correctly that the goods were deemed to have been entered and delivered for home consumption pursuant to s 61D(12). The factual conclusions were independent of each other and open to the Tribunal. The Tribunal's conclusions do not reveal any error and the Applicant's appeal must fail. 49 I would dismiss Appeal Grounds 2.5 to 2.7. The Commissioner was entitled to proceed by demand under s 60 of the Excise Act, imposing a collateral liability for the protection of revenue where duty properly payable had not been paid. NOTICE OF MOTION 50 By a Notice of Motion dated 18 August 2010, the Commissioner sought orders that the appeal be dismissed as incompetent and that the Applicant pay the Commissioner's costs, inclusive of the motion. In light of my earlier reasons, it is not necessary to address the Notice of Motion. It is dismissed. Each party should bear its own costs of the motion. CONCLUSION 51 I can identify no appellable error in the Tribunal's reasons for decision. The Applicant's appeal is dismissed with costs. I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon. Associate: Dated: 6 September 2010