Alcohol excise duty. Losses in fermentation processes.


Judgment of the Spanish Supreme Court dated on April 20, 2016.

This ruling analyses the origin of taxing by excise duty on alcohol, alcohol losses occurred in the manufacturing process of the corresponding drink.

The Regional Unit of customs and Excise duties of Andalucía decided to levy to SUGAR MONTERO, S.A. (hereinafter referred as The Company), related to the year 2002, by having appreciated an excess of loss of 2.341.903 litres of alcohol, in the process of alcoholic fermentation of molasses, which should be subject to tax because they corresponded to the losses of alcohol once discounted the regulatory maximum percentage of losses of 10%. At this point, it should be clarified that article 90.1 of the current excise regulations at that time, established as a maximum percentage of losses admissible in the process of alcoholic fermentation of molasses 10 per 100 of the amount of absolute alcohol.

However, The Company was not compliant with the criteria maintained by the Regional Unit since it understands that losses of alcohol have been real and they should not be subject to taxation because the taxable tax intended to tax the amount of alcohol actually manufactured.

In this sense, the second point alleged by The Company argues that it has been proved that the declared quantity of alcohol is the quantity effectively obtained, then the losses are real, and article 6.2 of the Spanish Excise Duties Law would be in violation due to the fact that it estates that losses of the excise products would not be subject to the tax occurred in excise, unforeseen circumstances or force majeure, when they do not exceed the percentages established by law or, when exceeding them, their existence has been proved before the tax administration, by any means of proof admissible in law.

The Spanish Supreme Court has ruled in favour of The Company. The Court agrees with the Company and considers that although the limit of 10% of losses of alcohol was exceeded, the amount of alcohol actually produced was the amount declared.

To reach this solution, the Court relied on the expert evidence practiced in the instance, as well as in a report prepared by the University of Córdoba, who believed impossible to carry out the manufacturing process with a less than 10% loss.

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STS 20 04 2016

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