Official Translation Official Translation REPUBLIC OF LITHUANIA Law on Excise duty 12 April 1994 No.I-429 (As amended by 17 May 2001 No. IX-332) Vilnius Article 1. Objective of this Law This Law shall

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, shall be calculated, collected and paid by the public company "Mažeikių nafta", irrespective of who the oil supplier is.

1. In the case specified in paragraph 2 of Article 5, excise duty shall also be paid into the budget by persons other than those indicated in paragraphs 1 and 2 hereof. Article
2. The Object of Excise Duty
3. The following products shall be subject to excise duty : 1) ethyl alcohol, undenatured, and alcoholic beverages, including beer; 2) smoking tobacco and tobacco products; 3) coffee, chocolate and food preparations containing cocoa; 4) jewellery, gold and silverware, excluding imitation jewellery and coins; 5) motor petrol, kerosene, aviation turbo jet fuel, gas oil (diesel fuel oil), heavy fuel oil, black oil, orimulsion; 6) luxury motor vehicles; 7) electricity, except when it is generated from fuel of biological origin; 8) publications of erotic and violent character. 9) lubricants of all types, except for bio-oils; 10) sugar, including sugar contained in food preparations (according to the list approved by the Government of the Republic of Lithuania); 11) liquid perfume, cosmetic preparations and toiletries as well as other products not specified herein, which contain ethyl alcohol and which, because of their low price, may be used as alcoholic beverage substitutes (according to the list compiled and the price limit set by the Government of the Republic of Lithuania) provided only that the concentration of ethyl alcohol in the products exceeds the minimum ethyl alcohol concentration specified by the Government; 12) liquefied gas for motor vehicles.
4. Imports as the object of excise duty shall be non-Lithuanian goods specified in paragraph 1 hereof which create a debt to the customs under the Customs Code of the Republic of Lithuania (hereinafter referred to as the Customs Code). Article 4.Taxable Value The taxable value shall be: 1) of goods made in the Republic of Lithuania - the selling price of goods exclusive of the excise duty and VAT; 2) of imports - the sum total of customs value of goods and customs duty thereon. Customs value of imports shall be calculated according to the procedure laid down in the Customs Code. Article
5. Taxable Goods
6. Excise duty shall be levied on goods listed to in Article 3 of this Law, if: 1) the goods are transferred from the warehouse of finished goods to another legal or natural person or to an enterprise without legal personality, to whom the right of disposal is assigned pursuant to the issued transfer documents. Such documents shall contain mandatory requisites provided for in Article 10 of the Law of the Republic of Lithuania on the Principles of Accounting; 2) enterprises possessing a license to engage in retail business in liquefied gas used for motor vehicles - on the goods listed in

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which have been used for their own needs or transferred to another natural or legal person or enterprise without legal personality to whom the right of disposal is assigned pursuant to the issued transfer documents (such documents shall contain mandatory requisites provided for in Article 10 of the Law of the Republic of Lithuania on the Principles of Accounting), other enterprises - on the goods indicated in

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on which excise duty has not been paid; 3) imported goods - in the cases specified in the Customs Code, when a debt to the customs is created. 2. The enterprises specified in subparagraphs 9 and 11 of paragraph 1 of Article 6 of this Law must calculate and pay, in the manner prescribed by the Government of the Republic of Lithuania, the excise duty in the amount specified in Article 51 of this Law on the transferred (sold or otherwise transferred into ownership) or used aviation turbo jet or ship fuel acquired or imported without paying the excise duty, except where: 1) the aviation turbo jet fuel is transferred or used for filling (providing with supplies) the aircraft carrying passengers and/or cargo by international or local routes or providing other paid services, also the aircraft taking part in the international military exercise or the aircraft used for fulfilling the functions assigned by the central or local government authorities; 2) the ship fuel is transferred or used for filling (providing with supplies) the ships carrying passengers and/or cargo by international or local routes or providing other paid services, also the ships used for fulfilling the functions of the central or local government authorities or for filling fishing vessels. 3. Excise duty is an element of the price of goods and, except for the excise duty on sugar, it shall not be indicated in the invoices and payment documents. The excise duty on sugar shall be indicated in the manner prescribed by the Government of the Republic of Lithuania. Article 51. Rates of Excise duty 1. Under this Law excise duty shall be levied on goods at the following rates: 1) undenatured ethyl alcohol and alcoholic beverages, except for the beverages and medicinal preparations with medicinal herbs falling within paragraphs 1 to 7 hereof containing ethyl alcohol, which have been registered with the State Register of Medicines of the Republic of Lithuania - LTL 3200/hl of pure ethyl alcohol; 2) mead brandies (made from natural bee honey) - LTL 0.12 /1% vol/l; 3) wines of fresh grapes - LTL 150/hl; 4) other fermented beverages:

1. a)having an actual alcoholic strength by volume of 8.5% or less - LTL40/hl;
2. b)other: until 31 December 2003 (inclusive) - LTL 130/hl and from 1 January 2004 - LTL 150/hl; 5) intermediate products, except those indicated in subparagraph 6 hereof, having:
3. a)actual alcoholic strength by volume of 15% or less: until 31 December 2003 (inclusive) - LTL250/hl, from 1 January 2004 - LTL150/hl;
4. b)actual alcoholic strength by volume of more than 15%: until 31 December 2003 (inclusive) - LTL370/hl, from 1 January 2004 - LTL230/hl; 6) intermediate products which correspond to the definition of fruit and berry wines approved by the Government of the Republic of Lithuania or the institution authorised by it, also intermediate products obtained from mead, having:
5. a)actual alcoholic strength by volume of 15% or less - LTL150/hl;
6. b)actual alcoholic strength by volume of more than 15% - LTL 230/hl; 7) beer (1hl of product) - LTL7/1%/vol/l (for 1% of actual alcoholic strength by volume); 8) filter and filterless cigarettes - LTL 32 /1000 cigarettes; (effective as from 1 March 2000) 9) packed smoking tobacco and other tobacco products - 50% of the taxable value; 10) motor petrol - 1210 LTL/t, 11) aviation turbo jet fuel, kerosense, gas oil (diesel fuel oil), heavy fuel oil - 560 LTL/t: 12) lubricants of all types - 240 LTL/t; 13) chocolate and other food preparations containing cocoa, except for cocoa powder and food preparations containing less than 18% by weight of cocoa butter - 10% of the taxable value; 14) coffee - 10% of the taxable value; 15) articles of jewellery or its constituents of precious metal or clad with precious metal, articles of goldsmiths’ or silversmiths’ wares and parts thereof, of precious metal or of metal clad with precious metal, articles of natural or cultured pearls, precious or semi-precious stones - natural, synthetic or reconstructed - 10% of the taxable value; 16) luxury motor vehicles, not older than 5 years (except for special purpose motor vehicles), included in the list compiled by the State Competition and Consumer Protection Agency under the Government of the Republic of Lithuania - 15% of the price in excess of LTL 60 000; 17) electricity - 1% of taxable value; 18) publications of erotic and violent character - 75% of taxable value; 19) sugar, including sugar contained in food preparations (according to the list approved by the Government) - LTL 0.01 /%/kg of the preparation; 20) liquid perfumes, cosmetic and toilet preparations and other preparations which contain ethyl alcohol and due to their low price may be used as substitutes of alcoholic beverages (according to the list compiled and the price threshold set by the Government) - LTL 10 /l of the preparation; 21) black oil and orimulsion - LTL 20 /t; 22) liquefied gas intended for motor vehicles - LTL170/1000l. 2. Repealed. 3. If the declared price of the imported motor vehicle attributed to the category of luxury vehicles as specified in subparagraph 16 of paragraph 1 hereof is less than the price of a new analogous motor vehicle, when calculating the taxable amount of the price the maximum tax-exempt price shall be reduced proportionately. 4. The amount of sugar (in percentage) on which the excise duty at the rate prescribed by subparagraph 19 of paragraph 1 hereof is levied shall be specified by the Government. 5. The codes of goods listed in paragraph 1 hereof shall be specified by the Government according to the Combined Customs Tariffs and Foreign Trade Statistical Nomenclature (hereinafter - CTN). 6. The rates of excise duty fixed in paragraph 1 of this Article for 1hl of pure ethyl alcohol shall be calculated for 100 l of ethyl alcohol having an actual alcoholic strength by volume of 100% vol at a temperature of 20°C. 7. The Government shall lay down the rules for keeping beer production records according to the actual alcoholic strength by volume of the beverage. Article 52. Definitions of Terms Used in Article 51 1. “Beer” means alcoholic beverage classified under heading 22.03 of the CTN as well as any beverage which is a mixture of beer and non-alcoholic beverages and falling under heading 22.06 of the CTN. 2. “Wine of fresh grapes” means still and sparkling wine of fresh grapes. 3. “Still wine of fresh grapes” means an alcoholic beverage falling under the headings 22.04 and 22.05 of the CTN and having an actual alcoholic strength of more than 1.2% vol but less than 18% vol, which is generated only by fermentation. 4. “Sparkling wine of fresh grapes” means an alcoholic beverage which falls under the subheadings 2204.10, 2204.21.10 and 2204.29.10 as well as under the heading 22.05 of the CTN, if it is in bottles with “mushroom” stoppers held in place by ties or fastening; wine otherwise put up with an excess pressure due to carbon dioxide in solution of not less the 3 bar. The wine has actual alcoholic strength by volume of over 1.2% vol but less than 15% vol and is generated only by fermentation. 5. “Other fermented beverages” means other still and sparkling alcoholic beverages falling under the heading 22.06 of the CTN (except for the beverages considered as beer under this Law) of an actual alcoholic strength by volume of over 1.2% vol but less than 15% vol and are generated only by fermentation. 6. “Intermediate products” means alcoholic beverages, including those fortified by admixture of any amount of ethyl alcohol, falling under headings 22.04 and 22.06 of the CTN and having an actual alcoholic strength by volume of over 1.2% vol but less than 22% vol and which under the provisions of this Law are not attributable to the beverages specified in paragraphs 1to 5 of this Law. Article 6. Exemptions from Excise duty 1. Excise duty shall not be levied on: 1) goods listed in subparagraphs 3 and 10 of paragraph 1, Article 3 of this Law when imported for the purpose of granting aid; 2) goods imported by natural persons (travellers), where the amount of imports does not exceed the amount to which the Government has granted exemption from import duty; 3) goods imported by diplomatic and consular missions of foreign states, also international organisations for their official operations, if exemption of said goods from excise duty is provided for under agreements between the international organisations and the Republic of Lithuania; 4) postal packages and postal parcels sent to the customs territory of the Republic of Lithuania, the customs value whereof is not in over LTL 400; 5) imported goods exempt from import duty under the Customs Code; 6) unbottled alcoholic beverages and their raw material provided that they are imported for the production of alcoholic beverages by state-owned enterprises licensed to produce said beverages; 7) exports; 8) imported goods provided that they are exempt from import duty under the Law of the Republic of Lithuania on Customs Tariffs; 9) aviation turbo jet fuel (the code shall be specified by the Government according to the CTN) imported or purchased from the Lithuanian producers by enterprises possessing a licence to engage in the import of, trade in or export of oil products, provided it is indicated in the licence that the enterprise engages in the filling of aircraft (aeroplanes) and the fuel codes according to the CTN are indicated. 10) tobacco (the code according to the CTN shall be specified by the Government), imported by the enterprises of the Republic of Lithuania which manufacture cigarettes. The list of enterprises which qualify for the duty relief shall be compiled by the Government. In cases where the specified tobacco will be used in the enterprises not for cigarette production but for other purposes, the specified enterprises must calculate and pay thereon the excise duty of the established amount; 11) ship fuel (the code according to the CTN shall be specified by the Government) which is imported or purchased from the Lithuanian producers by enterprises possessing a licence to engage in the import of, trade in or export of oil products, provided it is indicated in the licence that the enterprise engages in the filling of ships (bunkering) and the fuel code according to the CTN is stated; 12) ethyl alcohol dehidrated in the established manner, intended for use as raw material for the manufacture of biofuel; 13) rape methyl (ethyl) ester (RME) - biofuel produced from rape seed oil and compound part necessary in accordance with the technology; 14) gas oil (diesel fuel oil) intended for use in agriculture as well as in pond fisheries and other internal waters fisheries. For agricultural entities registered in the manner prescribed by the Government the amount of gas oil (diesel fuel oil) exempt from excise duty during the calendar year may not exceed 120 l per one hectare of agricultural land declared according to the procedure laid down by the Government or the institution authorised by it and 275 l per one ton of caught and sold fish. The procedure of application of the above duty relief shall be established by the Government or the institution authorised by it. (effective from 1 January 2002) 2. Moreover, excise duty shall not be levied on ethyl alcohol when the ethyl alcohol and raw materials containing ethyl alcohol are sold to : 1) the enterprises of the Republic of Lithuania for the production of vinegar and alcoholic beverages subject to excise duty; 2) pharmaceutical enterprises and health care institutions for health activities; to enterprises producing veterinary medicines - for the production of veterinary medicines and to veterinary supply enterprises - for veterinary purposes. 3. 100 000 decalitres of beer sold in a year’s time by small beer making companies (hereinafter referred to as small-scale breweries) shall be taxed at a 50% lower rate than the excise duty rate on beer set in Article 51 of this Law. As used in this Law, a small-scale brewery eligible for the duty relief is a brewery with the total output during a calendar year not in excess of 800 000 decalitres of beer, which is legally and economically independent from any other brewery, whose industrial premises are separated from any other brewery and which is not operating under a licence issued by another company. The procedure of application of the above duty relief shall be established by the Government of the Republic of Lithuania or the competent institution. 4. Vodka of alcoholic strength by volume of more than 30% but not more than 37% vol., which meets the technological and quality requirements set by the Government shall be taxed at a lower rate - 0.27 LTL/% vol/l. The duty relief shall be applicable upon the adoption by the Government of an appropriate resolution. Article 7. Refund of Excise duty or Waver of Excise duty Recovery 1. Excise duty paid on imports shall be refunded in the cases specified by the Customs Code. 2. Recovery of excise duty on imports shall be waved in the cases prescribed by the Customs Code. 3. Excise duty paid by the enterprises of the Republic of Lithuania on sugar used (as raw material) for manufacturing products specified in the list presented by the Government of the Republic of Lithuania shall be withheld when calculating the excise duty on sugar contained in the products specified in the Government’s list or refunded. The procedure for withholding and refunding the excise duty shall be established by the Government of the Republic of Lithuania or the institution authorised by it. Article 8. Taxable Period The taxable period of excise duty (except for excise duty on imports) shall be a calendar month at the expiry whereof the taxpayers must, by the 15th day of the following month, file an excise duty return with the local State Tax Inspectorate. Article 9. Excise Duty Payment Procedure 1. Excise duty on locally-manufactured goods must be paid into the budget before the 30th day of the following month. 2. The taxpayers whose average monthly amount of excise duty in the preceding month exceeded 50 000 LT shall pay excise duty: 1) by the 30th day of the month - for the first decade of the month; 2) by the 10th day of the next month - for the second decade of the month; 3) by the 20th day of the next month - for the remaining part of the month. 3. Excise duty on imports shall be paid into the budget in accordance with the procedure established by the Government. 4. The Government may establish a different procedure and time period for the calculation and payment of excise duty on alcoholic beverages, tobacco products and oil products, manufactured in and imported into the Republic of Lithuania. Article 10. Recovery of Excise duty 1. The payment of excise duty on goods (except for imports) shall be supervised by local State Tax Inspectorates which shall recover, in the manner prescribed by the Law on Tax Administration, the underpaid amounts of excise duty, also interest and penalties under the Law on Tax Administration. 2. The payment of excise duty on imports shall be supervised by the local customs which shall recover, in the manner established by the Customs Code, the underpaid amounts of excise duty and interest thereon for the current year and five preceding years. Article 11. Refund of Erroneously Paid (Recovered) Excise duty Claims for the refund of erroneously paid (recovered) excise duty may be filed within a two-year period after the day of payment (recovery) of the excise duty. Erroneously paid (recovered) amounts of excise duty (including amounts recognised as refundable on the proposal of the local customs) shall be refunded by the local State Tax Inspectorates in accordance with the procedure established by the Law on Tax Administration. Article 12. Sanctions for Violations of Law 1. If the taxpayer defaults in the payment of excise duty, there shall be collected interest the amount whereof shall be calculated in the manner specified by the Law on Tax Administration. If the taxpayer fails to file a tax return or if excise duty shown in the return are understated, the local State Tax Inspectorate shall impose penalties according to the procedure established by the Law on Tax Administration. 2. In the event of failure to comply with the customs approved treatments established by the Customs Code which results in the emergence of an import debt to the customs, default interest shall be calculated from the day the import debt to the customs is created. Article 13. Final Provisions The Government or the institution authorised by it shall establish the procedure of excise duty calculation and payment. I promulgate this Law passed by the Seimas of the Republic of Lithuania PRESIDENT OF THE REPUBLIC ALGIRDAS BRAZAUSKAS