Kilsaran Concrete v Commissioner of Valuation
 IESC 61
O'Donnell Donal J.
155 & 156/2011
IN THE MATTER OF THE VALUATION ACT, 2001, AND IN THE MATTER OF A VALUATION OF THE FOLLOWING PREMISES:
Property No. 451450, Quarry at Ballinascorney Upper, Brittas, County Dublin; Appeal No: VA08/5/187
Property No. 464562, Concrete Works at Tallaght By-Pass, Oldbawn, Tallaght, County Dublin; Appeal No: VA08/5/188
Property & conveyancing – Valuation – Exemption – Rateable plant – Whether exemption available to all parts of manufacturing process – Valuation Act 2001
This is an appeal by the Commissioner for Valuation from the judgment of Hedigan J. of the 7th December, 2010, which dealt with two linked appeals from decisions of the Valuation Tribunal, both delivered on the 2nd of September, 2009. The appeals raised a single issue in relation to the interpretation of the Valuation Act 2001, and in particular the determination of what constitutes rateable plant for the purposes of Section 55(1) of that Act. The specific issue raised in both appeals is whether, in circumstances where it is acknowledged that a process of change was induced in the course of a manufacturing process, the Commissioner of Valuation was obliged to treat all the containers equipment and pipe work involved in that manufacturing process as being non-rateable plant and thus entitled to exemption, (as the High Court found), or whether the exemption is limited to the particular vessel within which the process of change occurred and was induced (as the Tribunal had found). I conclude that the decision of the Tribunal was correct, and would accordingly allow the Commissioner's appeal.
The facts in both cases are relatively complex but can be reduced for present purposes to the following limited account.
Kilsaran Concrete Limited (Kilsaran) is the owner and occupier of a large stone quarry comprising a site of 157.7 hectares about three miles south of Tallaght, close to the Dublin/Wicklow border. The property contains both the PSH engineering screening processing plant and the Benninghoven TB 240 Asphalt Plant which is the subject matter of this appeal.
The valuation of the entire property was fixed after a section 30 appeal at €436,000. Kilsaran appealed to the Valuation Tribunal. At that hearing counsel sought leave, and was permitted, to argue a new point, and with which this case is now exclusively concerned, namely that the entirety of the asphalt production plant was entitled to exemption from rating.
The production of asphalt involves a process of mixing precise quantities of bitumen, aggregate, sand and filler (a fine calcium carbonate). Stone and sand are fed by front end loader into a hopper from which desired quantities are weighed and dispatched to a rotary drier. The aggregate is then heated and water driven off by steam. The dried ‘stone’ is then lifted by a bucket elevator to the top of a mixing platform. It is there sorted into differing sizes by vibrating screens and dispatched to different bins depending on size. Bitumen is an organic material made up of a mixture of heavy crude oils remaining after the distillation of oils for the transport and energy sectors. It is a brown to black semi-solid or solid. Bitumen is pumped from insulated silos to weighing vessels where it is dispatched to a mixing pan where it is mixed with measured quantities of stone and filler to form asphalt. Once mixed, asphalt is either loaded direct onto lorries and delivered on site, or is held in heated storage bins. Asphalt is primarily used for road construction.
Kilsaran is also the occupier of the Ready Mix Concrete plant which occupies a prominent location at the junction of the M50 on the Tallaght Bypass in County Dublin.
The manufacture of concrete involves a mixing of predetermined quantities of cement, aggregate, and water in a carefully controlled process. Concrete in its final form is used in all types of construction. The manufacturing process involves the storage of the constituents and their mixing. The plant in question consists of 12 aggregate bins mounted on a grid and fitted with vibrators to ensure discharge of all matter on to a conveyor belt. The material is then transported to a weigh bin and is weighed and transported to a second bin where it is held briefly, seconds before being discharged out on to a cross-conveyor and brought to a large batch conveyor. The material is brought to a holding bin and then dispatched to a pan mixer through a guillotine type door. Cement is delivered on site and fed under pressure by pipes into storage silos. The silos are fitted with electrically operated controlled devices which monitor the amount of cement and with filters to prevent dust escaping into the atmosphere. Where required, the cement is conveyed from the silo to a weigh hopper and then to the mixing pan by an electrically powered screw mechanism assisted by aerator pads. In the mixing pans, cement and aggregates are mixed with water pumped from a holding tank which is weighed before discharge. The pan mixer is a drum like container fitted with paddles which are electrically operated. It is fitted with a pneumatic door at the top and two hydraulically operated discharge doors deliver the mixed concrete into waiting trucks for onward delivery. The trucks themselves are fitted with cylinders which rotate to prevent the concrete from setting until arrival at the site. The entire process is mechanised and precisely controlled.
While the processes are distinct and the products different, both plants involve the production of important products made by mixing ingredients held on site in a large mixing pan. In the case of asphalt, bitumen, aggregate, sand and filler are mixed, and in the case of concrete, cement, water, and aggregate. In each case the individual components are delivered to the mixing pan by a carefully controlled integrated mechanical process. It is not in dispute for the purpose of this case, that the mixing pan in each case is an item of plant which is a construction affixed to relevant property and used for the containment of substance and designed and used primarily to induce a process of change in the substance contained, and therefore entitled to exemption from valuation. What is in issue however, is whether the entire process in each case involving all silos, hoppers, conveyor belts etc., can be said to be plant which is designed to induce a process of change and therefore entitled to exemption.
In the case of the asphalt plant, the Tribunal considered that Kilsaran was arguing for exemption on the grounds that the plant constituted a ‘single installation structure wherein a process of change is induced’. The Tribunal rejected this argument concluding:
‘The Tribunal finds on the facts, and on interpretation and evaluation of the authorities opened to it in the course of the hearing, that there is no case for blanket exemption in respect of the installation under appeal. It is clear from the evidence …… that no physical or chemical change in the constituent elements that make up bitumen occurs until they are brought together in the mixing pan. The process of change, once initiated, is irreversible and continues for some time after the bitumen, in its still molten state, is laid in its final position in the roadway.
On the other hand, the Tribunal is of the view that the said installation must be seen as the totality of individual items of plant, of which some may qualify for exemption from rateability and others will not, dependent on whether a process of change is induced in the substance contained therein. In the circumstances, the Tribunal finds that the rateable element of the asphalt plant is that agreed by the parties on a without prejudice basis i.e. a net annual value of €63,000.’
The Tribunal reached a similar conclusion in the case of the concrete plant. It said:
‘The Tribunal finds on the facts and on interpretation and evaluation of the authorities opened to it in the course of the hearing that there is no case for blanket exemption in respect of the installations under appeal. It is clear from the expert evidence that no physical or chemical change occurs in any of the constituent elements which together make up concrete, until such time as they are delivered to the mixing pan where they are mixed in accordance with the appropriate recipe to meet individual customer demands for concrete of specific type and use.
On the other hand, the Tribunal is of the view that the said installation must be seen as the totality of individual items of plant, of which some may qualify for exemption from rateability, and others will not, dependent on whether a process of change is induced in the substance contained therein or are used to transport material from one section of the plant to the other in order to facilitate the concrete manufacturing process which takes place in the mixing pan.’
Kilsaran expressed dissatisfaction with these determinations and sought a case stated to the High Court. The judgment of the High Court set out the relevant law and the submissions...
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