How Fuel-tax• Laws Stand
Page 56
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IN The Commercial Molar dated March 8, The Hawk referred to the anomaly that operators should have to pay tax on fuel used for operating tipping gear and various mechanical discharging devices. In order that the true position can be ascertained—and for the purpose of deciding whether pressure should be applied to obtain some concession if it is necessary—it is essential to consider the relevant legislation. This is to be found in Part 6 of the Customs and Excise Act, 1952, which deals with hydrocarbon oils and petrol substitutes.
By Section 199(1), a rebate of the Customs' duty on heavy oils is allowed—subject to the exceptions mentioned in the next Section—at the same rate as the duty itself in the case of oil fuels, gas oils and kerosene, and in any other case at the rate of Id. less than the duty. By sub-Section (2) of the same Section, a rebate on the Excise duty charged on any heavy oils is allowed at the full rate of the duty charged,
Exempted Classes
Section 200 contains the exception to this concession, and it provides that on the delivery of any heavy oils, if it is intended to use the oils as fuel for any mechanically propelled vehicle constructed or adapted for use on roads—subject to certain exempted classes of vehicles—a declaration to that effect has to be made and thereupon no rebate is allowed. The test of whether the oil is used as fuel for this purpose is if it is "used for any engine with which the vehicle is equipped, whether for the propulsion of the vehicle or not."
To complete •the picture, the exempted classes of vehicles—the exceptions to the exception—are those set out in paragraphs (a), (b), (c) and (d) of Section 4(2) of the Vehicles (Excise) Act, 1949, which include, in brief, agricultural engines and tractors not actually used on roads except for certain limited purposes directly connected with agriculture or forestry; trench diggers, excavators and shovellers used on roads only for or in connection with such work; and mobile cranes used on roads only in connection with work on sites immediately adjoining, and mowing machines.
Used on -Roads
To these classes the Customs and Excise Act, 1952, added road rollers. One must remember that every vehicle which does not come within one or other of these classes is within the exception to the concessions set out as to rebate in Section 199(1). It matters not if vehicles are not actually used on roads for the wording of the Act is quite clear: " constructed or adapted for use on roads "—it does not add "and so used."
The key to the whole question of rebate of duty on fuel used by auxiliary engines in, on or around motor vehicles is clearly to be found in the words " used as fuel for any engine with which the vehicle is equipped." Whether an auxiliary engine ii to be regarded as being part of the normal " equipment " of the parent vehicle is what matters, and presumably the Customs and Excise authorities have their own rules of thumb for determining the question.
So far as can be traced, there has been no decision in the courts directly on this point and, of course, unless and until such an interpretation is called for no" ruling" on the matter by any authority has any more validity in law than anyone else's mere opinion.
If one may hazard an opinion as to what auxiliary engines would be regarded as being part of the equipment of a vehicle, it seems most sensible to include the following: (a) all those engines which are merely a transference of power of the main engine (using " engine " in the broad sense to cover power take-offs); (b) all those engines which—although built in as a part of the original structure of the vehicle—are separate power units; (c) all those engines which, although not so built in, are either attached to the vehicle with some degree of permanence -or, even if not so attached, are regularly carried about with and used in connection with the parent vehicle.
Auxiliary Engines
Taking the matter a stage further, it is submitted that no auxiliary engine—whatever its function—can be said to be part of the equipment of a vehicle unless it falls into one or other of these classes. Thus, if an operator or industrial concern employs in a loading yard a number of loading or unloading appliances, whether in the form of fork-lift trucks or otherwise, it should be possible to obtain the rebate on their fuel, provided that this is of the heavy oil variety. This should be so provided only that the auxiliary engines are not identified in some way with the individual vehicles, so that they could not be said to form part of their attached equipment.
The position might be different, however, if a vehicle were so constructed that its loading or unloading could. not be effected at all without the aid of an auxiliary engine. In -that case, although it might perhaps share such an auxiliary with several other vehicles, it would be difficult to contend that it was not " equipped " with the auxiliary if the latter's assistance was essential for it to function at all.
Highly Anomalous .
If this interpretation of the Section is correct, it would seem to be highly anomalous that an engine not part of the equipment of a vehicle, but nevertheless often used in conjunction with it or to improve the efficiency of its operation, should qualify for a rebate of duty, whereas one that has the same uses and objectives which is either structurally a part of or normally carried on the vehicle should not. It would not seem that any practical considerations should justify this anomaly as presumably it is as easy to check on the misuse of oil in respect of which a rebate is allowed in the one case as in the other.
In any, event, the penalty provided by the Act— Section 200(3) provides for a penalty of three times the value of the oil or £100, whichever is the greater, together with forfeiture of the oil—seems adequate to discourage misuse of oil which has been the subject of a rebate.
It would require the simplest of amendments to these provisions, which could be inserted in the new Finance Bill, to ensure the removal of this anomaly and at the same time be an incentive to-efficiency in the increased use of auxiliary power units in modern transport operations.