Issue
Is the use of diesel fuel in a train's generator to power a reefer's refrigeration plant while the reefer is being transported by the 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 in a train's generator to power a reefer's refrigeration plant while the reefer is being transported by the train is 'use in rail transport' as defined in section 38 of the EGCSA.
Facts
An entity is engaged in rail transport.
A reefer is placed on the entity's train (a rail vehicle) and transported between two places.
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. In this case, whilst on the train the reefer is hooked up to electrical power from a large generator that forms part of the train.
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 (otherwise 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 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 diesel fuel consumed in the train's generator while it is powering the reefer's refrigeration plant to be accepted as being for 'use in rail transport', its use of diesel fuel must be use 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.
In this instance, the reefer is transported on the entity's train. Whilst on the train the reefer sources its power from the train's generator.
The train's generator is clearly equipment 'on' a rail vehicle (or part of the rail vehicle itself), and therefore this requirement is satisfied.
The phrase 'incidental to' is not defined in the EGCSA in relation to rail transport. The ordinary meaning of the term must then 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.
In this case 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 use of diesel fuel in the train's generator to power the reefer's refrigeration plant, while the reefer is being transported by the train, is clearly a use of diesel fuel that is both liable to happen in connection with, and naturally appertaining to the transport of a reefer by a train engaged in rail transport.
Therefore, the diesel fuel used by the train's generator to power the reefer's refrigeration plant is use in equipment on a rail vehicle, for a purpose incidental to using the rail vehicle in rail transport.
Accordingly, the use of diesel fuel in a train's generator to power a reefer's refrigeration plant while the reefer is being transported by the train is 'use in rail transport' as defined in section 38 of the EGCSA.