Issue
Is diesel fuel used 'in rail transport' under subsection 78A(1) of the Excise Act 1901 and subsection 164(1) of the Customs Act 1901 when the fuel is used in road vehicles fitted with equipment that operate on a fixed rail system for the purpose of moving passengers or goods?
Decision
Yes. Diesel fuel is used 'in rail transport' under subsection 78A(1) of the Excise Act and subsection 164(1) of the Customs Act when the fuel is used in road vehicles fitted with equipment that operate on a fixed rail system for the purpose of moving passengers or goods.
Facts
An entity operates a number of road vehicles that have been fitted with equipment that enables the vehicles to travel on rails.
When the equipment is engaged, the vehicle is controlled by the direct influence of the rails on the wheels and the bogies or wheel-sets under the vehicle.
The vehicles are used to move passengers or goods.
Reasons for Decision
Subsection 78A(1) of the Excise Act and subsection 164(1) of the Customs Act provide that: A rebate is, ... payable to a person who purchases diesel fuel for use by him: (ab) in rail transport (otherwise than for the purpose of propelling a road vehicle on a public road) in the course of carrying on an enterprise
Subsection 78A(7) of the Excise Act states that the term 'rail transport' takes the same meaning as that provided by the Customs Act. 'Rail transport' is defined in subsection 164(7) of the Customs Act as follows. ... rail transport includes light rail transport and transport by tram, but does not include any rail transport relating to forestry.
The Administrative Appeals Tribunal (AAT) in Re Serco Australia Pty Ltd and Commissioner of Taxation [2003] AATA 737; (2003) 76 ALD 223 found at paragraph 56 that: ... rail transport in the sense that we understand it to be used in the Excise Act is the conveyance of passengers or freight by vehicles on a fixed rail system. The wheels on the vehicles may, or may not, be made of steel and may be made of a material such as rubber. The vehicles are controlled by the direct influence of the rails on the wheel and the bogies or wheelsets located under the vehicle.
In this instance, the road vehicles that are fitted with equipment operate on a fixed rail system for the purpose of moving passengers or goods. The vehicles are controlled by the direct influence of the rails on the wheel and the bogies or wheelsets located under the vehicle. Therefore all the necessary elements of rail transport identified by the AAT are present.
The meaning of 'in' in the context of the expression 'in mining operations' was discussed in Chief Executive Officer of Customs v. WMC Resources Ltd (as agent for East Spar Alliance) (1998) 87 FCR 482. Nicholson J expressed the view that:
The word 'in' as it appears in para (a) of the definition of 'mining operations' is to be understood in this context as 'inclusion within, or occurrence during the course of '...
He then referred to the Full Federal Court decision in Chief Executive Officer of Customs v. Dyno Wesfarmers Limited (1997) 73 FCR 1, at page 5. In that case, the Court referred to the Shorter Oxford English Dictionary where the meaning of 'in' refers to 'in the process or act of'.
Having regard to those decisions, diesel fuel is used in rail transport when it is used in the process or act of, or during the course of 'rail transport'.
As all the necessary elements of rail transport are present, and the diesel fuel is being used 'in rail transport', diesel fuel is used 'in rail transport' under subsection 78A(1) of the Excise Act and subsection 164(1) of the Customs Act when the fuel is used in road vehicles fitted with equipment that operate on a fixed rail system for the purpose of moving passengers or goods.