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United Kingdom VAT & Duties Tribunals (Excise) Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> United Kingdom VAT & Duties Tribunals (Excise) Decisions >> Angus Braidwood & Sons Ltd v Revenue & Customs [2006] UKVAT(Excise) E00956 (23 May 2006)
URL: http://www.bailii.org/uk/cases/UKVAT/Excise/2006/E00956.html
Cite as: [2006] UKVAT(Excise) E956, [2006] UKVAT(Excise) E00956
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EO00956
Rebated fuel – mobile crane – crane part of trailer of an articulated vehicle – whether modifications to the attachment between trailer and tractor could allow the tractor to use rebated fuel – whether the entire vehicle created a mobile crane – No. HODA 1979 Schedule 1 para 9.
EDINBURGH TRIBUNAL CENTRE
ANGUS BRAIDWOOD & SONS LIMITED Appellants
- and -
THE COMMISSIONERS FOR
HER MAJESTY'S REVENUE & CUSTOMS Respondents
Tribunal: (Chairman): T Gordon Coutts, QC
(Member): Miss Karen Bruce Lockhart, WS
for the Appellants Julian Ghosh, with Ms Jane Patterson, of Counsel
for the Respondents Andrew Scott, Shepherd & Wedderburn WS
© CROWN COPYRIGHT 2006.
Introductory
This appeal was against a ruling by the Commissioners that certain vehicles operated by the Appellant were not entitled to use rebated fuel. Parties were agreed that the issue for the Tribunal was whether the Appellant's vehicles are mobile cranes, as statutorily defined.
The Tribunal heard evidence from Mr Angus Braidwood the former Managing Director of the Appellants. His evidence was presented in the form of a statement which he read. That statement was not agreed as a witness statement by the Respondent although its content was not seriously challenged. He with the assistance of The other witness for the Appellants was Mr Peter Miller, B.Sc an Engineer who had conducted certain modifications to the Appellants vehicles. There was an agreed statement of facts which was supplemented by the witness' evidence. Evidence was led for the Commissioners from Charles Markuss, an officer, who explained the reasoning behind his letter of 23 August 2004 refusing to accept the vehicles as mobile cranes. It should be noted that an assessment was issued on 6 June 2003 for £17,550.23. That assessment on review was reduced to £3,270.63 the amount which is at issue in the case and is not disputed. The Tribunal notes the somewhat startling reduction in an assessment purportedly made on adequate information.
The facts as admitted or proved
Angus Braidwood & Son Limited ("the Appellant") carries on the business of scrap metal merchants and processors. The Appellant processes and crushes scrap metal or illegal cars into bales on various sites by means of mobile baling machines. The bales are then removed using other goods vehicles and trailers. (These other goods vehicles and trailers use fuel on which full duty is paid).
Photographs were produced of the baling machine with its tractor unit, which adequately demonstrated its design structure and function.
Mr Braidwood had organised the acquisition of the baling machines of which there are 20 in the UK, 10 of those are operated by the Appellant. A technical manual showing the specification of the crane and baler was produced. It appeared to the Tribunal to be an ingenious, efficient, economical and environmentally friendly method of relieving amongst others local authorities of the nuisance of scrap cars in various parts of the countryside. Its obvious advantage is that it avoids a large volume of scrap metal being kept by having it reduced to manageable proportions, mainly for export.
The baling machines are a single unit of plant consisting of a heavy crane for lifting scrap, be it cars or other metal waste and a baler that crushes the material into bales. The machines are pulled by articulated lorries to which they are attached by a coupling. The 5th wheel coupling on eight articulated lorries has been modified by replacing the standard 2 inch fifth wheel coupling with heavy duty 3.5 inch couplings. The baling machines have also been modified by the replacement of their standard trailer kingpins with the 3.5 inch kingpins compatible with the 5th wheel couplings on the vehicles.
These modifications were made in late 2001 in order to attempt to bring the vehicles within the category of "mobile cranes" in paragraph 9 of Schedule 1 to the Hydrocarbon Oil Duties Act 1979 ("HODA"). Mobile cranes are "excepted vehicles" for the purposes of this Act and are entitled to use rebated fuel.
However, HMRC does not consider the modifications made by the Appellant to its vehicles sufficient to make them mobile cranes within the meaning of paragraph 9 of Schedule 1, HODA.
The Tribunal accepted the evidence of Mr Braidwood that the machine is used as a crane about 50% of the time and is used as a crane in conjunction with the baler in the remaining 50%. Accordingly the preponderance of use would be as a crane.
There are 2 fuel tanks associated with the combined tractor and trailer one which operates the baling machine and crane and the other the vehicle.
The Tribunal also accepted evidence from Mr Miller that the attempted modification did render the tractor unit unsuitable for use with ordinary trailers. In addition the capacity of the tractor unit would not be adequate for use with the heavier type of trailer normally associated with such a coupling and pin. Accordingly the Appellant did render it extremely unlikely that the tractor unit and trailer would ever be separated apart from servicing of the vehicle. However, it would be possible to utilise any of the tractor units with any of the baler units and indeed one tractor unit could substitute for another if, for example, there was a breakdown in the tractor unit, by attending upon and removing the crane and baler to another site where it could operate. However the use of the combined tractor and trailer normally was that they were not separate so that the tractor and trailer could readily be manoeuvred on the site according to the location of scrap.
The Statutory Provisions
HODA enacts in paragraph 9 of Schedule 1
Mobile Cranes
(1) A mobile crane is an excepted vehicle.
(2) In sub-paragraph (1) above "mobile crane" means a vehicle which is designed and constructed as a mobile crane and which-
(a) is used on public roads only as a crane in connection with work carried on at a site in the immediate vicinity or for the purpose of proceeding to and from a place where it is to be or has been used as a crane, and
(b) when so proceeding does not carry any load except such as is necessary for its propulsion or equipment.
Commissioners Reasons for Rejecting Use of Rebated Fuel
The reasoning in the letter of 23 August 2004 from the Respondents was somewhat confused a view being apparently adopted that the apparatus on the trailer could not be classified as a crane. That was elaborated upon in a witness statement, spoken to in evidence by Mr Markuss which gave an elaborate argument with a view to demonstrating that the trailer in question was not a mobile crane. That line of argument is specifically rejected by the Tribunal who have no hesitation as a matter of fact in holding that the apparatus or trailer consisting of the crane and baler does qualify as a crane. It is mobile in the sense that it can be moved from place to place. However the question remains whether a crane which is mobile is "a mobile crane" in fact or law for the purposes of HODA. The Commissioners contentions on that aspect, so far as relevant were:
"The vehicles in the instant case have not been "designed and constructed as … mobile crane[s]" as required in HODA Schedule 1 section 9; rather the vehicles that would actually consume the red diesel are basic tractor units designed to haul all manner of articulated road trailers.
The size of both the king-pins and the fifth wheels into which these pins fit is of no relevance, since even Mr Miller admits that some road trailers (albeit a minority) fitted with these larger king-pins are in use throughout the UK and the EU. Consequently the tractor units could quickly and easily be disconnected from the trailers and used for other purposes in which red diesel might be misused.
The grab-arm lifting device, together with the car crushing machinery is fitted to an articulated trailer, which is not self-propelled, and not to a rigid-chassis vehicle. In short, it relies on the detachable tractor unit for propulsion. As such the 'crane' itself has no propulsive capability and so cannot be a mobile crane entitled to use red diesel for any such propulsion on public roads within the meaning of HODA Schedule 1."
It should also be noted that Mr Markuss attempted to argue that the crane attached to the trailer was equivalent to a grab-arm on a delivery vehicle, that the baler on the trailer was a load and that since the Appellants letterhead talked to scrap metal processing not crane hire he asserted that the primary purpose of the equipment "has to be taken into account" this he said was to crush scrap vehicles.
We reject these latter contentions as unsound and of no consequence. We accept the evidence of Mr Braidwood that the trailer operates as a crane and from the photographs it is apparent that it not only behaves as a crane but it also looks like one. It bears no resemblance whatsoever to a grab-arm. That deficiency in Mr Markuss' argument may be explained by the fact that he did not make any inspection of the vehicle or its operation. Nor can an integral part of the trailer i.e. the baler mechanism be described as a load in any meaningful sense.
Contended for the Appellant
The trailer and tractor unit were designed and constructed as a mobile crane and that the modifications to the vehicles produced new single units and therefore became one vehicle.
Contended for the Respondent
The argument for the Respondent was essentially the quotation above from Mr Markuss.
Decision
The only issue which remained after hearing the facts for the Tribunal was whether the trailer mounted crane could qualify as a vehicle "vehicle" is not defined in the Act. They came to the view that it could not. The design and construction of the whole apparatus was not simply of a mobile crane it was of an articulated tractor unit attached to a mobile crane. The fuel which would be the subject to rebate was entirely consumed by the tractor unit and accordingly unless it could be regarded as one vehicle with the trailer by virtue of the modification to the king-pin rebate was not permissible.
The fact that a crane can be moved does not make it a "mobile crane". The Tribunal considers that it is of the essence of the exemption that the rebated fuel requires to be used by the crane to move itself on a road. Since this is not the case here the appeal must fail, the rebated fuel is not so used.
The appeal is accordingly dismissed. No motion was made for expenses.
EDN/05/8002