Issue
Is the use of diesel fuel to run generators on a vessel used to power ship based equipment that is used to load goods onto and unload goods from the vessel use 'in marine transport' as required by subsection 164(1) of the Customs Act 1901 and subsection 78A(1) of the Excise Act 1901 for the purposes of the diesel fuel rebate scheme?
Decision
No. The use of diesel fuel to run generators on a vessel used to power ship based equipment that is used to load goods onto and unload goods from the vessel is not use 'in marine transport' as required by subsection 164(1) of the Customs Act and subsection 78A(1) of the Excise Act for the purposes of the diesel fuel rebate scheme.
Facts
An entity owns a vessel. The entity uses diesel fuel to run generators on the vessel.
The generators provide power for a number of functions on the vessel. One function is the powering of equipment on the vessel that is used to load goods onto, and unload goods from, the vessel.
Reasons for Decision
Subsection 78A(1) of the Excise Act and subsection 164(1) of the Customs Act provide that a diesel fuel rebate is payable to a person who purchases diesel fuel for use by them 'in marine transport'.
'Marine transport' is defined for the purposes of both Acts in subsection 164(7) of the Customs Act as including: transport by vessels in or on fresh water, but does not include any transport relating to forestry.
That is, the definition of 'marine transport' merely contains inclusive and exclusive elements. It includes transport in or on fresh water, but does not include any transport relating to forestry.
Other than the fact that marine transport can take place on fresh water (and excludes transport related to forestry), the term takes on its ordinary meaning. The ordinary meaning of 'marine transport' was considered by the Administrative Appeals Tribunal (AAT) in Re Port of Brisbane Corporation and Deputy Commissioner of Taxation [2004] AATA 222 ( Port of Brisbane ) which considered whether or not various activities undertaken by dredging vessels constituted 'marine transport' for the purposes of the diesel fuel rebate scheme.
In that case, the AAT determined at paragraph 32 that: ...marine transport should in this instance be interpreted as meaning the act of conveying a thing or person from one place to another through or over water using some kind of vessel or vehicle.
The AAT went on to accept that the word 'in' in this context means 'in the process or act of' (see also Chief Executive Officer of Customs v. Dyno Wesfarmers Limited (1997) 73 FCR 1) before concluding at paragraph 34 that: For diesel to be used in the process or act of marine transport, the use must be associated with the conveying of a thing or person from one place to another through or over water using some kind of vessel or vehicle.
On this basis, the AAT allowed a rebate to be paid for the movement of dredging vessels to and from the site of dredging operations, and the movement of vessels that carried dredged spoil to and from the site of dredging operations or dumpsites.
However, diesel fuel used in powering dredging activities where there was no conveying by a vessel involved, was not considered to be associated with the 'conveying' of a thing or person from one place to another through or over water using some kind of vessel or vehicle, and therefore was not considered to be diesel fuel used 'in marine transport' for the purposes of the diesel fuel rebate scheme. The various dredging operations for which rebate was not payable included: • The use of a vacuum pump to suck spoil from the seabed into a hopper in the hold of the vessel • The dumping of dredged spoil through hydraulically operated valves in the bottom of the hopper or pumped ashore through long floating hoses; and • The use of a grab bucket fitted to a crane to grab and lift spoil from the seabed and deposit it in a separate hopper barge moored alongside.
When considered collectively, all these activities may be regarded as the loading or unloading of the goods (spoil) being transported by the dredging vessel.
Accordingly, the use of diesel fuel to run generators on a vessel used to power ship based equipment that is used to load goods onto and unload goods from the vessel is not use 'in marine transport' as required by subsection 164(1) of the Customs Act and subsection 78A(1) of the Excise Act for the purposes of the diesel fuel rebate scheme.