The Finance Minister in his budget speech in February 2023 announced the extension of the “Diesel Refund Regime” to include the purchase and use of diesel fuel in the manufacture of foodstuffs.
In this article

Amendments to section 75 unveiled

To implement this change, proposed amendments to section 75 of the Customs and Excise Act, 1964 were unveiled, with the retrospective effect set from 1 April 2023 through 31 March 2025. 

The diesel product referred to excludes the following:

  • “Smokeless diesel”, which is a mixture of kerosene (IP) and a lubricity agent, is normally used in underground mines.
  • Any mixture of diesel with kerosene (considered illegal/adulteration) or any other substance except biodiesel.
  • Any diesel entered for export or ships stores or in terms of any other procedure (other schedule6 refunds or per s75) except for home consumption or on which the levies are not paid as contemplated in this definition

Logbook maintenance and detailed audits required

However, there's more to this extension than meets the eye. A logbook must now be diligently maintained, providing a detailed audit trail of diesel usage for refund claims. This includes specific details of the receipt, storage, removal, disposal, or loss of diesel. The plot thickens as the schedule unveils various qualifying activities for foodstuff production, a determining factor for eligibility under this regime. 

Qualifying activities  

Undoubtedly, the Commissioner holds the power to decide the qualifying activities, adding an air of mystery to the process. But not everything is as it seems - certain activities are outright excluded, restricting this benefit from certain sectors such as mining, forestry, and agriculture.

Exclusions, premises, and registration 

Intriguingly, there are also exclusions for certain types of premises and a strict requirement for registration, creating a sense of exclusivity and formality around this refund regime. The complexity and exclusivity of the scheme certainly leave much to unravel, but one thing is certain - the impact of this extension will be felt far and wide.