Phone Call from Customs and Excise

[KeithP]

Hello everyone,
well after being accepted as a biodiesel producer as of the 24-Aug-2005 using straight veg oil guess who just had a call from THEM saying I was'nt and that the Commisioner, whoever he/she is, has decided that veg oil does not meet the specification of a bio-diesel fuel.

The very nice lady appologized if I had been misled by their letter accepting me, but now I am only a fuel substitute producer!

I wasn't going to start arguing, after all she was only the unfortunate lackey who has to phone everyone and tell them.

However after pointing out that their letter had indicated I was ok to go ahead as a biodiesel producer from the 24th Aug I said I would only being paying the lower rate up to this date. She is going to check and get back to me..

Looks like less veg oil from now on... until I get me one of them kits from USA to enable me to do the trans whatever!

Has anyone else had any calls like this? and do we have anything to throw back at them..

Keith

By the way that also includes WVO that has been filtered, washed etc... but not done the trans thingy

28/09/2005
Added copies of the letter I have since received later on in the thread here

[Matt the Cat]

I've just spoken with HMRC to chase up my application.
They basically said that I can only be registered as a fuel substitutes producer as SVO and WVO are not considered biodiesel unless transeterified.
They are sending me the new 179E document, which outlines thier 'new' definitions, and also the returns form so that I can pay them 47.1p per litre
I'm going to start using SVO because it'll still be a little cheaper and it is better for the environment but I wont let it lie!
Something has to be done

[andycook]

havent heard back from HMRC yet, with regard to the "essay" I sent them on why SVO in my opinion meets their "diesel quality" fuel argument.
But I think it will be a lost cause..

I am suprised that they are already chasing up people who are on the lower rate..
I think it is unfair though if they start wanting people to back-pay the duty difference between low and higher rates - it they were originally accepted at the lower rate.

[Philip]

Lord David Hunt.

Spoke to him on Monday and he sounded very interested and said he would ask a question in the house, not sure wether he meant the wife or Lords.
Can someone more literate than i, please email me a short resume why veg oil should be taxed at the lower rate, without having to transmogify! it. Also why then is LPG not taxed at higher rate, as you have to start on petrol etc.
Would be really grateful for some sort of understandable argument.
I will then just copy to email to him.
He also mentioned Oliver Letwin, as he said Oliver likes to bring up things like this.
Email to fuelcat@btconnect.com

Thanks, i am sure someone can explain it in detail more than i.

[CaptainBeaky]

Spoke to him on Monday and he sounded very interested and said he would ask a question in the house, not sure wether he meant the wife or Lords.
Can someone more literate than i, please email me a short resume why veg oil should be taxed at the lower rate, without having to transmogify! it. Also why then is LPG not taxed at higher rate, as you have to start on petrol etc.
Would be really grateful for some sort of understandable argument.
I will then just copy to email to him.
He also mentioned Oliver Letwin, as he said Oliver likes to bring up things like this.
Email to fuelcat@btconnect.com

Thanks, i am sure someone can explain it in detail more than i.

OK, I'm just about annoyed enough to have a stab at this...




Quote from Government News Network
www.gnn.gov.uk

Thursday 7 April 2005 16:43
HM Customs and Excise (National)

BUSINESS BRIEF


Contents:
1. Motor and heating fuels - Biofuel issues
2. Motor and heating fuels - Excise duty treatment of Bioethanol & Ethyl Tertiary Butyl Ether (ETBE)

1. MOTOR AND HEATING FUELS - BIOFUEL ISSUES

The aim of this Business Brief article is to clarify some of the issues surrounding Biofuels, in particular Biodiesel. This is ahead of publication of a new Public Notice 179E 'Biofuels and other fuel substitutes' (currently titled 'Biodiesel and Bioblend'), which Customs plan to issue in April 2005.

A related Business Brief article clarifying the duty treatment of Bioethanol and Ethyl Tertiary Butyl Ether (ETBE) is also published today.

What is Biodiesel?

Biodiesel is a diesel quality fuel that is produced from either biomass or waste cooking oil. It must also meet the following conditions:
* the ester content must be no less than 96.5% by weight; and
* the sulphur content must not exceed 0.005% by weight, or be nil.

What does 'diesel quality fuel' mean?

'Diesel quality fuel' means that the product must be capable of being used for the same purposes as ordinary diesel. This means that it will run, in a blend, an engine that would normally run on diesel.

Let's look at this in stages:
We have 4 requirements:

1. "A diesel quality fuel", i.e. capable of being used for the same purposes as ordinary [mineral] diesel [DERV]. "THis means that it will run, in a blend, an engine that would normally run on diesel."
OK, check - Surfs run quite happily on vegoil blends, and we can supply mileage records from members of the forum who have done so for many thousands of miles.

2. "Produced from biomass" - at the risk of being pedantically obvious, yes, Straight Vegetable Oil IS produced from biomass.

3. "Ester content no less than 96.5% by weight" - analysis available from vegetable oil manufacturers, but invariably well in excess of 96.5% w/v ester content.

4. "Sulphur content no greater than 0.005% by weight, or nil" - again, analysis available from vegetable oil manufacturers, and well under 0.005% w/v [50ppm].

On the last 2 points, I quote the letter sent to Andy Cook (user of this forum) from KTC Edibles [supplier of vegetable oils to Costco amongst other], in response to his query on this matter:

Dear Andrew,

Thank you for contacting KTC (Edibles) Limited.


All vegetable oils are triglycerides. That is, they are made up of a
single molecule of glycerol (which looks like a capital letter "E") with
three fatty acids attached to each "arm". The fatty acids are the bits
which are categorised as, saturates, mono-unsaturates and
polyunsaturates on food labelling. The fatty acids are attached to the
glycerol molecule by ester bonds. So the ester content of the oil is, in
effect, the same as the fatty acid content (because you can't have one
without the other).

I have been told by a number of sources that 100% vegetable oil
qualifies for the same tax relief as biodiesel as it meets the same
chemical description (96.5% ester). Indeed, because fresh, refined
vegwetable oil has a very low FFA (free fatty acid) value, and therefore
a very high ester content, it is exactly what is meant by the
legislation and customs regulations when they cite a minimum of 96.5%
ester.

Sulphur "poisons" the nickel catalyst used in the vegetable oil refining
process. Consequently it is removed as far as chemically possible from
the raw material before the refining process and strictly limited in the
crude starting material.

0.0005% is another way of saying 5 parts per million. Our refiners have
assured us that refined oils do indeed have less than 5 p.p.m. sulphur
(or < 5mg/Kg, if you prefer).

[End quote]


So, to sum up:
1. SVO IS a diesel-quality fuel under the fiscal definition, because it is capable of running diesel engines, either as a blend with mineral DERV or as a 100% fuel.
2. SVO is self-evidently produced from biomass, unless there are some vegetable-oil rigs in the North Sea that we don't know about.
3. SVO is by definition made up of triglyceride esters, and therefore meets the >96.5% w/v ester stipulation, as advised by oil suppliers.
4. SVO contains less than the stipulated level (0.005% or 50ppm stated on the GNN link, 0.0005% or 5ppm stated by KTC) of sulphur.

Of the 4 requirements within the fiscal definition of biodiesel, SVO meets all of them. It is therefore baffling as to why HM Customs and Excise refuse to allow the lower biodiesel duty to be paid on SVO, and one must question both the motives and legality of this ultra vires action.




How's that?

[boxertwin]

OK, I'm just about annoyed enough to have a stab at this...




Quote from Government News Network
www.gnn.gov.uk



Let's look at this in stages:
We have 4 requirements:

1. "A diesel quality fuel", i.e. capable of being used for the same purposes as ordinary [mineral] diesel [DERV]. "THis means that it will run, in a blend, an engine that would normally run on diesel."
OK, check - Surfs run quite happily on vegoil blends, and we can supply mileage records from members of the forum who have done so for many thousands of miles.

2. "Produced from biomass" - at the risk of being pedantically obvious, yes, Straight Vegetable Oil IS produced from biomass.

3. "Ester content no less than 96.5% by weight" - analysis available from vegetable oil manufacturers, but invariably well in excess of 96.5% w/v ester content.

4. "Sulphur content no greater than 0.005% by weight, or nil" - again, analysis available from vegetable oil manufacturers, and well under 0.005% w/v [50ppm].

On the last 2 points, I quote the letter sent to Andy Cook (user of this forum) from KTC Edibles [supplier of vegetable oils to Costco amongst other], in response to his query on this matter:

Dear Andrew,

Thank you for contacting KTC (Edibles) Limited.


All vegetable oils are triglycerides. That is, they are made up of a
single molecule of glycerol (which looks like a capital letter "E") with
three fatty acids attached to each "arm". The fatty acids are the bits
which are categorised as, saturates, mono-unsaturates and
polyunsaturates on food labelling. The fatty acids are attached to the
glycerol molecule by ester bonds. So the ester content of the oil is, in
effect, the same as the fatty acid content (because you can't have one
without the other).

I have been told by a number of sources that 100% vegetable oil
qualifies for the same tax relief as biodiesel as it meets the same
chemical description (96.5% ester). Indeed, because fresh, refined
vegwetable oil has a very low FFA (free fatty acid) value, and therefore
a very high ester content, it is exactly what is meant by the
legislation and customs regulations when they cite a minimum of 96.5%
ester.

Sulphur "poisons" the nickel catalyst used in the vegetable oil refining
process. Consequently it is removed as far as chemically possible from
the raw material before the refining process and strictly limited in the
crude starting material.

0.0005% is another way of saying 5 parts per million. Our refiners have
assured us that refined oils do indeed have less than 5 p.p.m. sulphur
(or < 5mg/Kg, if you prefer).

[End quote]


So, to sum up:
1. SVO IS a diesel-quality fuel under the fiscal definition, because it is capable of running diesel engines, either as a blend with mineral DERV or as a 100% fuel.
2. SVO is self-evidently produced from biomass, unless there are some vegetable-oil rigs in the North Sea that we don't know about.
3. SVO is by definition made up of triglyceride esters, and therefore meets the >96.5% w/v ester stipulation, as advised by oil suppliers.
4. SVO contains less than the stipulated level (0.005% or 50ppm stated on the GNN link, 0.0005% or 5ppm stated by KTC) of sulphur.

Of the 4 requirements within the fiscal definition of biodiesel, SVO meets all of them. It is therefore baffling as to why HM Customs and Excise refuse to allow the lower biodiesel duty to be paid on SVO, and one must question both the motives and legality of this ultra vires action.




How's that?

1st class !!

[KeithP]

Might be first class.. but where do we stand? Have we any qualified chemists, solicitors... hell even Green Peace or EU people/represtatives that can take this forward?

Keith

[CaptainBeaky]

Might be first class.. but where do we stand? Have we any qualified chemists, solicitors... hell even Green Peace or EU people/represtatives that can take this forward?

Keith

I am a (degree-qualified) chemist, and FlySurfer Edy's degree is Enviromental Physical Science with chemistry (did I remember that right, Phil?). And that is "chemist", not "pharmacist". I do not work in Boots...

And I didn't get the previous rant text off Google, either! (apart form the quoted text from GNN)


Do we have any lawyers on board?

[the careful driver]

To back up . . .

The whole point of the legislation is to reduce CO2 - Carbon Dioxide - emissions.

Biomass oil does this because the plant uses photosynthesis to capture CO2 from the atmosphere in the first place.
The NET result is a NIL addition to atmospheric CO2 when the plant oil is burnt.

Plants extract CO2, create oil in their seeds, then we burn it in the cars it is put back again. As opposed to digging up buried oil and releasing all the pent up CO2 and creating global warming.

That is why Biodiesel has been deemed a good thing.

And of course, is why Vegoil should be deemed a good thing.

And this is 100% better than LPG which is a Petrochem product in the first place. (ie, nil reduction in CO2 emissions).

Pg

[da SLUG man]

i've been talking to my dad... i'll show him that and see if he can have a word with someone.

he usually only deals with health, but may know someone "in the know"

[Matt the Cat]

Perhaps we should look at the European angle also. The fact that the likes of Germany etc recognise the the use of SVO as a biofuel (I think tax free!!) should be added to the argument, as we should all be the same, being European and all.
I'm sure there would be some MPs intrested in that. I doubt they want the rest of Europe showing them up?!?!

[TonyN]

Good post guys, the way I see, the gov dosn't have a leg to stand on, they might as well admit they are trying to rip us off, and not interested in anything else.

[KeithP]

Quick off the mark!

Hello all,
Following my telephone call I have received the document attached along with my first return.

Of interest is that on page 2 they are allowing me to pay previously 'set aside' amounts at the lower rate.

Also in paragraph two 'The Commissioners' decision is based on the reason for the introduction of the reduced duty rate for biodiesel, which was to provide for the additional cost in producing the fuel against the cost of producing ordinary diesel.'



By the way Captain Beaky, I was'nt having a go, just asking the question. I certainly was not inferring that you 'didn't get the previous rant text off Google'. Sorry if you thought otherwise.

[CaptainBeaky]

Hello all,
Following my telephone call I have received the document attached along with my first return.

Of interest is that on page 2 they are allowing me to pay previously 'set aside' amounts at the lower rate.

Also in paragraph two 'The Commissioners' decision is based on the reason for the introduction of the reduced duty rate for biodiesel, which was to provide for the additional cost in producing the fuel against the cost of producing ordinary diesel.'

By the way Captain Beaky, I was'nt having a go, just asking the question. I certainly was not inferring that you 'didn't get the previous rant text off Google'. Sorry if you thought otherwise.

No offence taken - I may have been a bit grumpy

So kind of them to not charge you for their f#ck-up

The definition of biodiesel is quite clear, and by any reasonable interpretation, SVO fits the definition.

Oh, and I want to be absolutely clear on this point:

The Commissioners task is to enforce the law as it stands.

Parliament's task is to make the law.

The courts' task is to interpret the law.

The task of HMCE is to enforce the law AS IT STANDS, not interpret it to their own satisfaction, and that includes the Commissioners.
The law in question is the Hydrocarbon Oils Duties Act 1979, as modified by the Finance Act 2002.
They are simply not permitted to alter the law because of what they consider to have been the "intention" of that law.

Sorry to froth and rant, but this is a major constitutional issue here - since when does Customs and Excise overrule the elected Parliament of this country?

[Matt the Cat]

Couldn't have put it better myself