Issue
Is the use of diesel fuel in a vessel while 'bed levelling', 'use in a vessel in marine transport' for the purposes of subsection 36(2) of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?
Decision
No. The use of diesel fuel in a vessel while 'bed levelling' is not 'use in a vessel in marine transport' for the purposes of subsection 36(2) of the EGCSA.
Facts
An entity has purchased diesel fuel which it uses in a vessel engaged in bed levelling.
The vessel travels to a site and then undertakes its bed levelling work.
'Bed levelling' involves dragging a 'bed levelling bar' across the sea bed to level off the sea bed at the designated site by moving sediment from shallow areas into deeper areas.
Reasons for Decision
Subsection 53(1) of the EGCSA states that an entity is entitled to an off-road credit if they purchase or import into Australia off-road diesel fuel for a use by them that qualifies.
Subsection 53(3) of the EGCSA provides that use in marine transport, in the course of carrying on an enterprise, is a use that qualifies. The phrase 'use in marine transport' is defined in section 36 of the EGCSA to mean a number of activities, including (per subsection 36(2)) 'use in a vessel in marine transport'.
A key step in determining what constitutes 'use in a vessel in marine transport' is to determine the meaning of the term 'marine transport'.
In Re Port of Brisbane Corporation and Deputy Commissioner of Taxation [2004] AATA 222 ( Port of Brisbane ), the Administrative Appeals Tribunal (AAT) considered the meaning of 'marine transport' for the purposes of the Diesel Fuel Rebate Scheme, which was the precursor to the Energy Grants (Credits) Scheme.
In Port of Brisbane , the AAT reasoned at paragraph 31 that: ... the phrase "use in ... marine transport" should be accorded its ordinary and natural meaning. ...
And further at paragraph 32 that: .... In the Tribunal's opinion, the key to the meaning of "marine transport" lies in the meaning of the word "transport". The Concise Macquarie Dictionary (3rd edition 1988) lists as the sixth meaning of transport: 6. a means of transporting, as a ship, truck or plane used for transporting soldiers or military stores, or convicts. The first meaning of transport in the Oxford English Dictionary is: 1. the action of carrying or conveying a thing or person from one place to another, conveyance.
The use of the word "transport" in the phrase "marine transport" suggests a conveyance - something which does the conveying - a vehicle or vessel or aircraft which moves through its particular medium (land, water, air) carrying a thing or person. The medium in this case is, of course, water. Thus, ... "marine transport" should in this instance be interpreted as meaning the act of conveying a thing...
The AAT then applied this definition of 'marine transport' to conclude that: ... diesel used in powering dredging activities where there is no conveying by a vessel involved, is not used in marine transport so as to attract a fuel rebate.
In this instance, as in dredging, there is no conveyance of goods by the vessel while it is carrying out its bed levelling activities. Rather, the vessel is distributing the sediment more evenly across the seabed at the bed levelling site. Even though the vessel is in motion while conducting bed levelling activities, the movement forms a fundamental part of the bed levelling activity and it cannot be said to involve the transportation of the material away from the site.
As the vessel is not engaged in 'marine transport' while bed levelling, the diesel fuel used by the vessel is not for 'use in a vessel in marine transport' for the purposes of subsection 36(2) of the EGCSA.