Issue
Is diesel fuel used in a generator located on a wharf next to a vessel, located 'at' residential premises as required by paragraph 78(1)(b) of the Excise Act 1901 and paragraph 164(1)(b) of the Customs Act 1901 ?
Decision
Yes. Diesel fuel used in a generator located on a wharf next to a vessel is located 'at' residential premises as required by paragraph 78(1)(b) of the Excise Act and paragraph 164(1)(b) of the Customs Act.
Facts
A certain vessel visits an Australian port and shuts down its on-board generators while in port.
An entity is contracted to provide shore electrical power to the vessels while they are in port to ensure the day to day operation of the vessel.
The generator providing the electrical power is placed on the wharf near the vessel.
The living quarters of the crew on the vessel are 'residential premises' for the purposes of the diesel fuel rebate scheme.
Reasons for Decision
Paragraph 78A(1)(b) of the Excise Act and paragraph 164(1)(b) of the Customs Act provide that a rebate is payable to a person who purchases diesel fuel for use by them 'at residential premises' to generate electricity for use in meeting the domestic requirements of residents of the premises.
The meaning of the word 'at' in this context has been considered several times by the Federal Court. In Re: Collector of Customs, Tasmania and: Flinders Island Community Association (1985) 7 FCR 205 (the Flinders Island Case ), the Federal Court found that in order to meet the requirement that the fuel is used 'at' residential premises, there must be a close connection between the use (i.e. where the generator is) and the residential premises (the vessel) and that the generation take place in physical proximity to the premises.
In Collector of Customs v. Rottnest Island Authority (1994) 48 FCR 177, the Court accepted the view put forward in the Flinders Island Case but further determined that the generating plant should be 'in sufficient proximity to the premises as to enable it reasonably to be identified with the premises. It must be appurtenant to the premises and coherent with them'.
As the power generators are placed on the wharf near the vessel, there is a close connection between the generator and the vessel, and the power generation takes place in sufficient physical proximity to the vessel to allow it to be reasonably identified with the premises, the fuel is used 'at' the residential premises.