Brambles Australia and Commissioner of Taxation

[2005] AATA 5

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 5

ADMINISTRATIVE APPEALS TRIBUNAL      )

)           No   WT2004/72

TAXATION APPEALS DIVISION		)                 WT2004/73
Re		BRAMBLES AUSTRALIA

Applicant

And   COMMISSIONER OF TAXATION

Respondent

DECISION

Tribunal   M J Allen, Member

Date  6 January 2005

Place  Perth

Decision

  The Tribunal affirms the decisions made by the respondent:

(a)     on 19 December 2003 to disallow an objection dated 21 October          2003; and

(b)     on 22 December 2003 to disallow an objection dated 24 October          2003.

............(sgd M J Allen)...............

Member          
CATCHWORDS

CUSTOMS and EXCISE - diesel fuel rebate scheme – claim for rebate in respect of activities of loading and unloading goods on and from rail vehicles and loading ore into a hopper that feeds a shiploading system – whether those activities are “in marine transport” and “in rail transport” – finding that loading ore into a hopper is not an activity in marine transport – finding that loading and unloading goods onto and from rail vehicles is not an activity in rail transport – decisions under review affirmed. 

Administrative Appeals Tribunal Act 1975

Energy Grants (Credits) Scheme Act 2003

Excise Act 1901 ss 78,78A

Customs Act 1901 ss 163, 164

Chief Executive Officer of Customs v Dyno Wesfarmers Ltd (1997) 73 FCR 1

Collector of Customs v Pozzolanic Enterprises Pty Ltd 115 ALR 1

Dawson Rockwater v Chief Executive Officer of Customs [1998] FCA 1010

Re Port of Brisbane Corporation and Deputy Commissioner of Taxation [2004] AATA 222

Port of Brisbane Corporation v Deputy Commissioner of Taxation [2004] FCA 1232

REASONS FOR DECISION

6 January 2005   M J Allen, Member

1.      In these proceedings the applicant seeks review of 2 decisions made by delegates of the respondent to disallow objections made by the applicant to earlier decisions made on behalf of the respondent to refuse claims for rebates in respect of diesel fuel.  The 2 decisions under review relate to the following matters:

(a)In proceedings WT2004/72, the decision under review was made on 19 December 2003 and disallowed the objection made by the applicant to a decision made on 27 August 2003 to refuse a rebate for diesel fuel purchased between July 2000 and May 2003 relating to the loading and unloading of rail wagons or rail vehicles at Kwinana and Malcolm (pursuant to a contract between the applicant and a company named Murrin Murrin Operations Pty Ltd) and the loading and unloading of rail wagons or rail vehicles at Leonora and Esperance pursuant to a contract between the applicant and WMC Resources Ltd.

(b)In proceedings WT2004/73 the decision under review was made on 22 December 2003 in which the respondent disallowed an objection to a decision made on 28 August 2003 to refuse a rebate for diesel fuel purchased between July 2000 and May 2003 for use in the loading of iron ore and nickel concentrate at the Port of Esperance pursuant to contracts between the applicant and the Esperance Port Authority and WMC Resources Ltd.  

2. At the hearing of the matter the applicant was represented by Mr G Taylor, a chartered accountant, and the respondent was represented by Mr Allanson of counsel. No oral evidence was given in the matter and the Tribunal received into evidence the documents filed pursuant to s 37 of the Administrative Appeals Tribunal Act 1975.

background

3.      It is not in dispute that the applicant carries on business as a provider of road transport services and transport-related industrial services in Western Australia.  In the course of that business the applicant has entered into the contractual arrangements referred to above.  The following description of the various activities undertaken by the applicant that are of relevance in the current proceedings is based upon a description of the activities set out in the applicant’s Statements of facts and contentions in the 2 matters, which the respondent agrees describes the relevant operations (see para 7 and 9 of the respondent’s Statements of facts and contentions in relation to proceedings WT2004/72 and para 4 of the respondent’s Statement of Facts and Contentions in relation to proceedings WT2004/73).

4.      In relation to the contract between the applicant and Murrin Murrin Operations Pty Ltd, the applicant provides services at Kwinana and Malcolm in Western Australia.  This involves the loading of various goods onto rail wagons at the applicant’s facility at Kwinana including bulk sulphur, caustic soda, and hydrous ammonia, hydrogen peroxide and general purpose items such as empty drums.   Bulk sulphur is carried in specialised tubs and liquid chemicals are transported in bulk liquid containers.  General purpose goods are transported in general purpose shipping containers.  These goods are unloaded by the applicant at its facilities at Malcolm and transferred to road vehicles to complete the journey to the Murrin Murrin mine site.  The applicant also transports mining products from the Murrin Murrin mine site to Kwinana.  This involves the loading of products such as ammonium sulphate and processed nickel and cobalt onto road vehicles at the mine site, their transfer to rail wagons at Malcolm, and the unloading thereof at Kwinana.

5.      At Kwinana the applicant uses front end loaders to load bulk sulphur from a stockpile into the specialised tubs and uses several forklift vehicles to load and unload shipping containers and other general containers, and also to shunt rail wagons along a rail siding to facilitate the loading and unloading process. 

6.      At Malcolm the loading and unloading of rail wagons is carried out by forklift vehicles.

7.      In relation to the contract between the applicant and WMC Resources Ltd, the applicant transports by road nickel concentrate from the mine in specialised containers known as kibbles.  At Leonora the applicant unloads the kibbles from the road vehicles and transfers them to rail wagons, which transport the kibbles to Esperance.  At Esperance the applicant unloads the kibbles form the rail wagons.  At both Leonora and Esperance the loading and unloading activities are performed by forklift vehicles and at Esperance a front end loader is also used to shunt the rail wagons during the loading and unloading operations as necessary.  At Esperance empty kibbles are loaded onto rail wagons for return to Leonora by rail and then by road to the Mt Keith mine site.

8.      In proceedings WT2004/73 the applicant provides largely identical services to the Esperance Port authority and WMC.  In the case of the Port Authority the applicant is responsible for ensuring that the hopper supplying 2 belt feeders is kept sufficiently filled with iron ore to be loaded onto the ship.  In the case of the WMC contract the applicant’s responsibilities include managing the nickel concentrate stockpile to ensure sufficient concentrate is available for shipping, and the loading of the hopper that supplies the Port Authority’s ship loading conveyor.  In both cases the applicant employed front end loaders to move iron ore or nickel from storage stockpiles into the relevant hopper that fed the ship loading conveyors.

9.      The parties agreed that if the decision of the Tribunal is that the applicant is entitled to rebates for the diesel fuel used in the loading and unloading activities described above then the matter should be remitted to the respondent for the assessment of the volumes of fuel involved and the calculation of the monetary value of the rebates.

statutory framework

10.     Prior to 2003 the circumstances in which a person was entitled to a rebate for diesel fuel was governed by the terms of the Customs Act 1901 or the Excise Act 1901, depending on whether the fuel had been imported and subject to customs duties or locally produced and subject to excise duty. The rebate provisions of the two Acts were in identical terms. In 2003 the relevant provisions of those two Acts were repealed and replaced by the provisions of the Energy Grants (Credits) Scheme Act 2003. Sections 163(1) and 164 of the Customs Act mirrored sections 78(1) and 78A of the Excise Act. Sections 164(1) of the Customs Act and s 78A(1) of the Excise Act each provided that

“a rebate is … payable to a person who purchases diesel fuel for use by the person:

(ab) 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;

(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.

…”           

11.     Paragraphs (ab) and (ac) were inserted by the Customs and Excise Amendment (Diesel Fuel Rebates Scheme) Act 1999, which also provided definitions for the terms “marine transport” and “rail transport”. These definitions are contained in s164(7) of the Customs Act and s 78A(7) of the Excise Act adopts those definitions for the purposes of the latter Act.  The two definitions are as follows:

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

Rail transport includes light rail transport and transport by tram, but does not include any rail transport relating to forestry.”

12.     The amendments to the legislation in 1999 involved the insertion of new categories in which the rebate would be allowed and the amendment of the formulation of existing categories.  Whereas the rebate was previously available for activities “in connection with” the permitted uses, that phrase was replaced by the preposition “in”.  Further reference will be made below to the significance of that change.

consideration

13.     For the applicant it is contended that the terms “in marine transport” and “in rail transport” should be given a wide, beneficial and commonsense meaning rather than a narrow or restricted meaning.  They should not be confined to the physical acts of transport by rail vehicles or marine vessels, nor should they be interpreted to require transport “in a vessel” or “in a rail vehicle”.  In relation to marine transport, the applicant contended that the correct interpretation was that adopted by this Tribunal in Re Port of Brisbane Corporation and Deputy Commissioner of Taxation [2004] AATA 222 that - “marine transport” should 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” and that the word “in” should mean “in the process or act of”.  Whether or not the applicant’s activities fall within the statutory definitions involve judgements of fact and degree about the ambit of the relevant activities.  The operation of unloading and loading rail wagons and ships can be described as being in the process of transporting goods by rail or ship without placing an undue strain on the normal use of language. 

14.     For the respondent it was contended that the change in the wording of the relevant provisions from “connected with” to “in” is significant and evidences that the legislature did not intend an extended meaning to be given to the provisions.  The respondent acknowledges that loading and unloading activities may be activities undertaken “in connection with” rail or marine transport but that activity does not involve the movement of goods from one place to another by rail and nor does it occur within or during the course of, or in the process or act of, the movement of goods by rail or in marine transport.

15.     It is now established that provisions of the kind here in question are part of beneficial legislation and should not be construed narrowly.  They should be construed beneficially rather than restrictively: see Collector of Customs v Pozzolanic Enterprises Pty Ltd 115 ALR 1 at 11.

16.     In relation to the change of wording from “connected with” to “in” in the relevant provisions Merkel J in Dawson Rockwater v Chief Executive Officer of Customs [1998] 1010 FCA after reviewing various authorities concluded that:

“in my view the use of the preposition “in” in s 164(1) is significant.  It was intended by the legislature to define more clearly the activities which were to be entitled to the diesel fuel rebate.  Whilst it may be arguable that the anterior and subsequent transportation activities to which I had referred were activities undertaken “in connection with” the preparation of a site to enable mining to commence, in my view, those activities are not activities undertaken “in” the preparation of a site to enable mining to commence.”

17.     Moore J observed in Port of Brisbane Corporation v Deputy Commissioner of Taxation [2004] FCA 1232 at [19] that

“the word ‘in’ found in similar formulations in diesel fuel rebate legislation has been viewed as meaning “in the process or act of: see Chief Executive Officer of Customs v Dyno Wesfarmers Ltd (1997) 73 FCR 1 at 5.  The definition of “marine transport” is, as discussed below, one of extension.  However, the definition does suggest fairly clearly the word “marine” was intended to be a reference to transport in or on the sea.  The word “transport” in the expression probably has the meaning suggested by counsel for the corporation.  That is, the act, action or method of transporting or conveying a thing or person.  Accordingly, the use of diesel “in marine transport” is likely to have been intended to comprehend the use of diesel in the process or act of transporting or conveying a thing or person in or on the sea as well as, by operation of the definition, in or on fresh water.”

18.     At [20] Moore J said that

“ … the reference to “transport by vessels” in the extended definition indicates what Parliament intended, namely, that the expression “in marine transport”, as it concerns transport in or on the sea is directed to transport by vessels.  Were it otherwise, the expression “in marine transport” would comprehend transport in or on the sea whether by vessels or other means but transport in or on fresh water by vessels only.  While the definition does not use the word “only”, it is framed in a way which suggests this limitation.  It is difficult to discern why the legislature would have created this apparent anomaly which would arise if transport in or on the sea was not limited to transport by vessels.”

19.     In relation to rail transport, in my opinion the reasoning referred to above is equally relevant and I consider the expression “in rail transport” as meaning or comprehending the use of diesel in the process or act of transporting or conveying a thing or person from one place to another by rail.

20.     It remains then a question of fact and degree as to whether the relevant activities of the applicant in loading and unloading goods into and from rail vehicles, and loading ore from a stockpile into a hopper that feeds a system for loading the ore onto a ship, can be said to fall within those specified activities.

21.     The agreed facts describing the applicant’s activities on the wharf at Esperance do not, in my opinion, show that the applicant’s activities are so closely bound up with the movement of goods by sea as to constitute an activity that can be said to occur in the course of or in the process of transporting goods by sea.  It may, in an appropriate case, be possible to say that the loading of a ship is part of the process of marine transport.  For example, the loading of goods onto a ship by a crane that is located on board the ship might satisfy that requirement, see Port of Brisbane v Deputy Commissioner of Taxation (supra) at [23].   Although the activities of the applicant in loading ore into a hopper that feeds a ship loading operation may be (as the respondent acknowledges) connected with marine transport or for the purpose of facilitating marine transport, in my opinion the loading activities on the wharf are not an activity that occurs “in marine transport”.  Accordingly, the decision under review in proceedings WT2004/73 is affirmed.

22.     In relation to the applicant’s activities involving loading and unloading rail vehicles at Kwinana, Malcolm, Leonora and Esperance similar considerations apply.  The applicant, in carrying out those activities is engaged in an enterprise of transport and transport-related activities.  Once again, the processes of loading and unloading goods onto and from rail vehicles, and the shunting of rail vehicles within a siding, may well be activities that are connected with or which may facilitate rail transport in the sense that, but for those activities, the rail transport could not occur.  Nevertheless, the loading and unloading activities do not involve the movement of goods by rail nor do they occur in the course of movement of goods by rail.  I consider that the loading and unloading and shunting operations are not activities that occur in the course or process of rail transport.  Accordingly, the decision under review in proceedings WT2004/72 is affirmed.

23.     For the reasons above my decision is that I affirm the decisions of the respondent made on 19 December 2003 to disallow the applicant’s objection dated 21 October 2003, and on 22 December 2003 to disallow the applicant’s objection dated 24 October 2003.

I certify that the 23 preceding paragraphs are a true copy of the reasons for the decision herein of M J Allen, Member.   

Signed:         ...........(sgd J Lim)..............
  Associate

Date/s of Hearing  17 September 2004
Date of Decision   6 January 2005
Counsel for the Applicant          Gerry Taylor
Counsel for the Respondent     Jeremy Allanson
Solicitor for the Respondent      Australian Government Solicitor