ATO Interpretative Decision

ATO ID 2004/541 (Withdrawn)

Excise

• This ATO ID is withdrawn from the database because it contains a view in respect of the diesel fuel rebate provisions of the Excise Act 1901 and or the Customs Act 1901 that were repealed with effect from 1 July 2003. Despite its withdrawal from the database, this ATO ID continues to be a precedential view in respect of decisions for fuel purchased before 1 July 2003.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Are the operations of a dredge at the disposal site while discharging spoil (dredged material), 'marine transport' as defined in subsection 164(7) of the Customs Act 1901 for the purposes of the diesel fuel rebate scheme?

Decision

No. The operations of a dredge at the disposal site while discharging spoil (dredged material) are not 'marine transport' as defined in subsection 164(7) of the Customs Act for the purposes of the diesel fuel rebate scheme

Facts

An entity purchases diesel fuel that it uses in operating a dredge.

After dredging the material at the dredging site, the dredge transports the spoil to the disposal site.

At the disposal site, the dredge uses diesel fuel to:

•

operate equipment to discharge the spoil

•

propel the dredge, if required, while discharging the spoil, and

•

run non-dredging equipment on the dredge (for example, provision of electricity on the dredge).

The dredge is propelled while the spoil is being discharged to ensure the proper discharge of the spoil and its distribution over the disposal site.

Reasons for Decision

Subsection 78A(1) of the Excise Act 1901 and subsection 164(1) of the Customs Act provide that:

A rebate is ...payable to a person who purchases diesel fuel for use by him:

... (ac) in marine transport (otherwise than for the purpose of propelling a road vehicle on a public road) in the course of carrying on an enterprise; ...

'Marine transport' is defined for the purposes of both Acts in subsection 164(7) of the Customs Act as:

marine transport includes transport by vessels in or on fresh water, but does not include any transport relating to forestry.

In Re Port of Brisbane Corporation and Deputy Commissioner of Taxation [2004] AATA 222 (Port of Brisbane), the Administrative Appeals Tribunal (the Tribunal) considered the meaning of 'marine transport' for the purposes of the diesel fuel rebate scheme, particularly in regard to the activities of dredging vessels.

In Port of Brisbane, the Tribunal reasoned at paragraph 31 that:

... the phrase "use in ... marine transport" should be accorded its ordinary and natural meaning. In this context, the normal association of "marine" with the sea is extended by the definition of "marine transport" in s 164(7) to include freshwater. That same definition, which "includes transport by vessels in or on freshwater", while not an exhaustive definition because it is extending the ordinary meaning of "marine" to include an association not only with sea water but also with fresh water, nevertheless refers to transport by vessels.

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 ed, (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 Tribunal then applied this definition of marine transport to conclude at paragraph 35 that:

... diesel used in powering dredging activities where these is no conveying by a vessel involved, is not used in marine transport so as to attract a fuel rebate

'Dredging activities' include not only the extraction of spoil, but also the disposal of spoil from the vessel. Accordingly, the Tribunal determined that only the diesel fuel used:

•

to power a self-propelled dredge in travelling to and from dredging operations or dump sites, and

•

to tow a dredge which is not self-propelled to and from dredging operations or dumpsites

was use 'in marine transport'.

In this instance, there is no conveyance by the dredge while it is involved in the discharge of the spoil. Even though the dredge is in motion while conducting such dredging activities, the movement of the dredge forms a fundamental part of the discharge of the spoil at the disposal site and cannot be said to involve the transportation of the spoil away from the dredging site.

As the dredge is not engaged in marine transport, the use of diesel fuel to power non-dredging equipment on the dredge whilst the dredge is discharging spoil is not considered to be marine transport.

Accordingly, the operations of a dredge while discharging spoil are not 'marine transport' as defined in subsection 164(7) of the Customs Act for the purposes of the diesel fuel rebate scheme.

Legislative References:
Excise Act 1901
   subsection 78A(1)
   paragraph 78A(1)(ac)

Case References:
Re Port of Brisbane Corporation and Deputy Commissioner of Taxation
   [2004] AATA 222
   55 ATR 1029

ATO Interpretative Decisions overturned by this decision
ATO ID 2002/643

Keywords
DFRS marine
Diesel fuel rebate scheme
Excise
Excise payments

Business Line:  Excise

Date of publication:  2 July 2004

ISSN: 1445-2782