Issue
Is the use of diesel fuel to power a reefer's generator, whilst the reefer is being transported on a train, 'use in rail transport' as defined in section 38 of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?
Decision
Yes. The use of diesel fuel to power a reefer's generator, whilst the reefer is being transported on a train, is 'use in rail transport' as defined in section 38 of the EGCSA.
Facts
An entity purchases diesel fuel which is placed in a 'reefer'.
A reefer is a refrigerated container that ordinarily uses diesel fuel from its own tank to power the reefer's refrigeration plant. The reefer's refrigeration plant must be kept running at all times to ensure that the contents of the reefer are kept at the required temperature.
The reefer is placed on a train (a rail vehicle) and transported between two places.
Reasons for Decision
Subsection 53(1) of the EGCSA provides that an entity is, subject to certain conditions, entitled to an off-road credit if they purchase diesel fuel for a use by them that qualifies.
Subsection 53(3) of the EGCSA provides that use in rail transport (other than for the purpose of propelling a road vehicle on a public road) in the course of carrying on an enterprise, is a use that qualifies.
Section 38 of the EGCSA sets out the meaning of the expression 'use in rail transport', and it includes various uses. The most relevant use is set out in subsection 38(5) of the EGCSA, which states that: Use in equipment in or on a rail vehicle for air-conditioning, heating, lighting or for any purpose incidental to using the rail vehicle: (a) in rail transport; or (b) for any of the purposes mentioned in paragraphs (3)(a) to (f);or (c) as mentioned in subsection (4); is use in rail transport.
In order for the reefer's use of diesel fuel to be considered 'use in rail transport' under the above subsection, the diesel fuel must be used in equipment in or on the rail vehicle, for any purpose incidental to using the rail vehicle in rail transport. Each test will be considered in turn.
The term 'rail vehicle' is defined in section 39 of the EGCSA and includes a train. In this instance, a reefer is transported on the train, and the reefer uses diesel fuel to power the generator attached to the reefer. The reefer's diesel fuel does not come from the train itself, but rather from its own separate fuel tank.
The reefer's equipment (that is, the generator) is clearly 'on' the rail vehicle, as it is carried by the train. What must then be considered is whether the use of this equipment is 'for any purpose incidental to using the rail vehicle'.
The phrase 'incidental to' is not defined in the EGCSA in relation to rail transport, and its ordinary meaning should be considered.
The phrase 'incidental to' is defined in The Macquarie Dictionary , 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW as: ...liable to happen in connection with; naturally appertaining to.
The reefer and its generator are carried on the train, and the use of diesel fuel in the generator is necessary to enable perishable goods to be transported by the train.
Therefore, in this case, the diesel fuel used to power the refrigerated trailer's generator is used in equipment in a rail vehicle for a purpose incidental to using the rail vehicle in rail transport.
Accordingly, the use of diesel fuel to power a reefer's generator, whilst the reefer is being transported on a train, is 'use in rail transport' as defined in section 38 of the EGCSA.