H—3B

748. The view is clearly open upon section 55 that the process of manufacturing beer from worts does not include the bottling or the casking of beer and therefore that "the wastage in manufacture does not include wastage in bottling or casking. On the ■other hand, it may be claimed that section 55 does include wastage of these kinds. We referred the point as it affected wastage in bottling to counsel. Counsel for the trade have submitted a careful and extensive memorandum on the position with a view to .showing that bottling losses are included in the section. Counsel for the Alliance have submitted a memorandum arguing briefly that clearly they are not included. Prima Jade, it would appear that they are not included, but we are not required to decide the point. It is sufficient that an important question does arise under the section as to whether the allowance for wastage does or does not include bottling losses. 749. To the wastage allowed in manufacturing the worts of any brewing into beer is added an allowance for the use of beer upon the brewery premises. This is beer ■consumed by workers and customers. It is negligible in relation to the total wastage. 750. The allowance for wastage is prescribed by Eegulation 6 of the regulations made under Part 111 of the Finance Act, 1915. The wastage allowed is 10 per cent, of "the worts pitched for fermentation. As it is an allowance intended to cover the wastage incurred in manufacturing the worts into beer, the wastage may apparently be described as it is described in England (see section 13 (3) (b) of the Inland Revenue Act, 1880) as wastage " in respect of such accidental loss and waste as arises in the brewing of beer." 751. The New Zealand law provides no check upon the quantity of the worts which the brewer should obtain from the quantity of the materials which he uses " for any brewing." In England there is a materials' check, and the English system should be explained. 752. Beer duty in England is governed by section 13 of the Inland Revenue Act, 1880, and section 10 of the Finance Act, 1896 (see R. 6408, 7323 ; Highmore's Excise "Laws, 3rd Ed., Vol. I, p. 262 ; and Halsbury's Laws of England, 2nd Ed., Vol. 28, pp. 334 and 335). The charge is imposed on the worts actually produced, calculated on the •quantity and gravity of the worts as declared by the brewer in his brewer's book. The -check by reference to the materials is fixed by the statutory provisions and is stated in :2 Halsbury, Vol. 28, p. 335, as follows : A brewer of beer is deemed to have obtained 36 gallons of worts at the standard gravity -(1057 degrees) when he has used in brewing either 84 lb. weight of malt or corn (other than rice, flaked maize, and corn similarly prepared or dressed), or 56 lb. weight of sugar. From the quantity so deemed to have been obtained from the materials used, 4 per cent, is deducted. The net result is then compared with the quantity of worts shown in the brewer's book. The higher figure is selected and brought to charge. From the figure so brought to charge, 6 per cent, is deducted as representing the accidental wastage involved in brewing the beer from the worts, and the duty is imposed upon the balance. 753. If 6 per cent, is a fair allowance for the wastage involved in brewing beer from worts in England, it may be asked why 10 per cent, should be allowed for similar wastage in New Zealand when the Finance Act, 1915, was designed to adopt the English system. 754. It should first be explained that the matter of wastage did not assume importance Until the beer duty was substantially raised. When the beer duty was low, the duty payable upon the amount by which the allowance for wastage exceeded the actual wastage was not important. When the beer duty was increased, it became important; and the Comptroller of Customs estimated that in 1941 the revenue lost duty on some 763,988 gallons (being the difference between the loss and the gain in gallons shown in the schedule at R. 1310). Calculated at the average of present rate, the duty on that amount would be £110,778. (For this calculation the average present rate has been taken at 2s. 10*8 d., which is an average of the duty paid on the entire production of beer brewed in New Zealand in 1944.)

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