Issue
Does a blend of diesel fuel and ethanol constitute 'diesel fuel' as defined in subsection 4(1) of the Excise Act 1901 for the purposes of the Diesel Fuel Rebate Scheme (the Off Road Scheme)?
Decision
Yes. A blend of diesel fuel and ethanol is 'diesel fuel' as defined in subsection 4(1) of the Excise Act for the purposes of the Off Road Scheme.
Facts
After 17 September 2002, the applicant purchased a blend of diesel and ethanol.
Excise Duty has been paid by the manufacturer of the blended fuel on the individual constituents in the blend on the basis that they were to be used as fuels in an internal combustion engine.
Reasons for Decision
Subsection 78A(1) of the Excise Act makes provision for a rebate to be payable in respect of diesel fuel purchased for use in certain eligible activities.
Subsection 4(1) of the Excise Act defines diesel fuel 'to include any other like fuel of a kind that is prescribed'.
Paragraph (a) of subregulation 2AA(1) of the Excise Regulations 1925 prescribes the following fuels as being diesel fuel: (i) a product on which excise duty has been paid at the rate that applies to diesel fuel at the time of the payment; and (ii) that is capable of being used as fuel in a diesel engine.
Item 11C of the Schedule to the Excise Tariff Act 1921 sets the rate of duty for unblended diesel fuel. Excise Tariff Proposal No. 4 (2002) imposed excise duty on ethanol from midnight on 17 September 2002 at the same rate that applies to unblended diesel fuel. The Proposal also applies to subsection 6G(2) of the Excise Tariff Act (which determines the rate of duty payable on blends), with the effect that the rate of duty payable on a fuel which is a blend of diesel and ethanol is the same rate as that which applies to unblended diesel fuel. Therefore the first requirement of paragraph (a) of subregulation 2AA(1) of the Excise Regulations is satisfied.
The blend of diesel and ethanol is also clearly capable of being used as fuel in a diesel engine. Therefore the second requirement of sub-regulation 2AA(1) is also satisfied.
As the blended fuel purchased by the applicant meets the definition of 'diesel fuel' in paragraph (a) in subregulation 2AA, it is treated as diesel fuel for the purposes of subsection 78A(1) of the Excise Act and the off road scheme generally. Therefore the blended fuel will attract the diesel fuel rebate if all other eligibility conditions are met.