Tax Education: Customs and Excise Duty Act Penalty and Interest on Petroleum Products:

This article aims to provide guidance for players in the oil marketing industry and those dealing in petroleum products regarding the payment of unpaid penalties and interest on excisable goods (specifically petroleum products) that were lifted before April 2017 and after May 2015.

Excise duty is a levy ( tax) that is imposed on specific goods manufactured?in or imported?to the country. Prior to the coming into effect of the Excise Duty?Act 2014 (Act 878) on the 12th of November 2014, Customs Excise and Preventive PNDCL?330?( 1993) ( as amended) was regulating the excise duty payment.

CUSTOMS EXCISE LAW AND PREVENTIVE PNDCL 330 ( AS AMENDED).

PNDC Law 330 ( as amended)?serves three main purposes: Customs levy on imported products, preventive and excise duty.?In the case of excise duty, the PNDC?law regulates the collection and payment of specific goods imported and produced in Ghana ( Petroleum products are part of excisable products listed by the Act. ?In PNDC Law 330, in section 71, it states that a taxpayer who fails to pay the tax due on goods imported or manufactured into the country is liable to pay a pecuniary rate of 15% on the value of the amount outstanding and 125% interest at a commercial rate on the number of days?the amount remain outstanding.

This means that when an importer of a petroleum product (excisable product), or an Oil Marketing Company fails to pay on the due date, the company is liable to pay a tax of 15% flat rate on the value of the product?imported or manufactured and in addition, pay interest of 125% at the?commercial bank rate for the period the amount remains outstanding.?The emphasis here is that if the provision in PNDCL 330 was repealed by Act 891, why then impose?a penalty on the product for which payment has since been made?

CUSTOMS AND EXCISE (PETROLEUM TAXES AND PETROLEUM RELATED LEVIES) ACT - 2005 (ACT 685).

In 2005, Act 685 was passed and subsequently amended by Act 787. This Act provides the basis for imposing the excise duty. In section 8 of the Act, it states that The Customs, Excise and Preventive Service Law, 1993 (PNDCL.330) shall apply for the purposes of collection of the taxes and levies imposed by this Act. In this context, one could have reasoned that the imposition and collection of penalty in the PNDC Law 330, particularly section 71 of Act 330 will serve the purpose of sanctioning non-compliance to Act 685.

EXCISE DUTY ACT 2014 ( ACT 878)

The government in 2014 decided to decouple the excise duty from the PNDC Law 330 by introducing the Excise Duty Act 878.?The act came into force on 12 November 2014. The act in section 1 states that Excise duty is payable on goods specified in the First Schedule where the goods are manufactured in or imported into the country.?NOTE. In the first schedule, petroleum product was not on the list of item that the levy is to be paid on.

Section 32 of the Excise Duty Act 878,?“A?manufacturer?( emphasis) who fails to make a payment required under this Act to the Commissioner-General by the due date is liable to pay a penalty of 15% of the amount due and interest of 5% of the amount due for each day that the failure continues”.?The penalty here means that when a manufacturer fails to pay the levy due, he is liable to pay a penalty of 15% flat on the amount due and, in addition, pays?5% interest on the amount daily.

It's worth noting that section 32 of Act 878 doesn't mention penalties for imported or petroleum products. This likely means that excise duty for imported products is paid at the time of importation and once customs duty is paid and the goods are cleared, there shouldn't be any compliance issues.

So, there could not be any risk of default on the part of the importer in paying the levy.?It is the writer’s view that the framers of the Act might had this in mind before drafting the Law.

It is possible to argue that oil marketing companies may not be held liable under section 32 of the Excise Duty Act. Therefore, what section would an Oil Marketing Company be subject to for a penalty due to not paying the excise levy promptly?

Section 33 of Act 878 (Application of Other Laws) refers to PNDC Law 330 (with modification) which applies in cases where the Excise Duty Act cannot be used. This means that an Oil Marketing Company may still face penalties and interest for outstanding excisable products (such as petroleum products) under PNDC Law 330.

So why should the Ghana Revenue?Authority still rely on section 32 to charge penalty and interest whereas there are the most reliable applicable provisions to use?

Customs Act 2015 (ACT 891)

In 2015, Parliament passed a new customs act, which took effect from 18th May 2015. The Customs Act 2015 ( Act 891) has repealed the Customs, Excise and Preventive Act ( PNDC L 330). Effectively, all provisions in the PNDC L 330 were repealed unless saved. The Act that imposed the penalty and interest in the PNDCL 330 was repealed by the Customs Act 2015 Act 891.

This means that petroleum products sold between June 2015 and January 2017 are not subject to penalty or interest due to the repeal of PNDC L 330 in May 2015.

Subsequent repeals of Excise Duty on Petroleum products in 2017.

In 2017, Parliament repealed the Customs and Excise Duty Act ( Act 685).? This then imply that excise duty on petroleum has been taken out from the statute book.

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The writer is a Tax Practitioner and a Managing Consultant at EMK Consult

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