Issue
Is use in a vessel chartered for voyages for the training of student seafarers 'use in marine transport' as defined in section 36 of the Energy Grants (Credits) Scheme Act 2003 (EGCSA)?
Decision
Yes. Use in a vessel chartered for voyages for the training of student seafarers is 'use in marine transport' as defined in section 36 of the EGCSA.
Facts
An educational institution charters a vessel in order to take students on training voyages. The students are enrolled in seafaring courses.
The vessel carries groups of students, accompanied by at least two staff members from the institution, on the training voyages for the purpose of furthering their studies.
The vessel's owner operates the vessel during the training voyages and purchases off-road diesel fuel for use in propelling the vessel.
Reasons for Decision
The meaning of the expression use in marine transport is set out in section 36 of the EGCSA in terms of four categories of use: • use in a vessel in marine transport (subsection 36(2) of the EGCSA) • use in a vessel for various purposes (subsections 36(3) and 36(4) of the EGCSA) • use in a vessel or its equipment on certain journeys (subsection 36(5) of the EGCSA), and • use in equipment for certain purposes (subsection 36(6) of the EGCSA).
In addition, subsection 36(7) of the EGCSA excludes use in a dredge or its equipment and subsection 36(8) of the EGCSA, to avoid doubt, states that a hire or charter vessel does not need to be operating a scheduled service.
Voyages undertaken for the purpose of education or training are not specifically referred to in section 36 of the EGCSA. Therefore it is necessary to consider whether the voyages undertaken by this entity fall within the more general category of 'use in a vessel in marine transport' in subsection 36(2) of the EGCSA. Subsection 36(2) provides that: (2) Use in a vessel in marine transport is use in marine transport.
The Federal Court in Port of Brisbane Corporation v. Deputy Commissioner of Taxation (2004) 140 FCR 375; (2004) 57 ATR 545; [2004] FCA 1232 ( Port of Brisbane ) considered the meaning of the expression 'use... in marine transport' in section 164 of the Customs Act 1901 in relation to the diesel fuel rebate scheme (DFRS) which was the precursor to the Energy Grants Credits Scheme (EGCS). Moore J approved the construction given by the Administrative Appeals Tribunal in Re Port of Brisbane Corporation and Deputy Commissioner of Taxation (2204) 55 ATR 1029; [2004] AATA 222 that 'marine transport' means 'the act of conveying a thing or a person from one place to another through or over water using some kind of vessel or vehicle' ( Port of Brisbane ).
In Re Allseas Marine Contractors SA and Federal Commissioner of Taxation (2005) 58 ATR 1213; [2005] AATA 7, which also dealt with the DFRS provisions, the Tribunal applied Port of Brisbane in finding that various transport activities, including the laying of the pipe onto the sea floor, were 'marine transport'. However, the Tribunal did not accept that the conveyance of crew and equipment on a survey vessel during survey operations fell within the meaning of the expression. The Tribunal stated: Of course, crew and equipment were on board the vessel while the surveying was performed. But the vessel was not then carrying them as part of an activity of marine transport or ancillary to marine transport. The immediate purpose in carrying them was to perform the survey work, which I find is not marine transport.
The EGCSA is intended to reflect the same entitlements as the former DFRS (except in specific instances). This view is confirmed in the Explanatory Memorandum to the Energy Grants (Credits) Scheme Bill 2003, paragraphs 2.14-2.16. Therefore cases addressing entitlement under the former DFRS remain relevant under the EGCSA.
The key issue here is whether the purpose of the vessel in undertaking the charter voyages is to transport persons or to perform some other function.
Although it could be argued that the purpose is to train students and transporting them is merely incidental to this purpose, the better view is that the main purpose is to place the students in a maritime environment - in other words, to convey them by sea. The educational institution charters the vessel so that it can provide training to the students. The fact that the voyage assists this activity does not overshadow the fact that the vessel's principal purpose in undertaking the voyage is to convey the students (and staff members).
Therefore, use in a vessel chartered for voyages for the training of student seafarers is 'use in marine transport' as defined in section 36 of the EGCSA.